Saving the World from Google

by Tom McNichol

Back in the 1990s when Microsoft made a habit of taunting the antitrust division of the United States Department of Justice, no one would have expected it to complain too loudly about another company's efforts to dominate a particular market. Those were the days when the Seattle?based software giant's own dominance seemed virtually unassailable. Those were also the days before there was a company called Google.

Now, as the undisputed king of the Internet, Google performs more than two billion online searches a day, controlling two-thirds of the worldwide search market. It also posted an astonishing $23.7 billion in revenue for 2009. (Even more astonishing, Microsoft's revenue was $58.4 billion for its latest fiscal year.) But as formidable as Google is now, its plans to revolutionize the world of books would give it an insurmountable lead over any competitor, rivals argue.

Already, Google has digitized 12 million books, quietly assembling what it describes as a 21st-century version of Alexandria's ancient library. Google views the project as a classic example of how a company can do well by doing good, opening up a new market for itself while giving users instant access to just about any book that's ever been published. But Microsoft, along with Yahoo and Amazon, hardly relishes the prospect of seeing Google dominate the emerging digital book market, much less fortify its control over searches. Together with writers' groups, libraries, and research institutions, these companies have formed the Open Book Alliance, which aims to open Google's private book-scanning enterprise to competition and public scrutiny.

The attorney representing this alliance is Gary Reback, of counsel at Carr & Ferrell in Palo Alto. A veteran antitrust lawyer, Reback's main claim to fame going into this fight was that he spearheaded the legal campaign that led to the Justice Department's (DOJ) lawsuit against Microsoft, when the company tried to lock up the browser market. Now, with Microsoft on his side, Reback faces a greater challenge.

"At least with [the old] Microsoft, you knew where you stood because they were candid about their goals," Reback reflects. "They thought it was their God-given right to do what they wanted to do, and you could engage the adversary on that basis. But with Google, they really seem to believe that they're good guys, and that's how they present themselves."

This aura is conveyed by Google's credo: "Don't be evil." It's further underscored by the company's stated goal of making all books instantly accessible to anyone with a computer. Even Reback found himself charmed by the idea, at first. "A digital library?" he recalls thinking. "That's wonderful. Sign me up."

Google's literary ambitions became widely known in October 2008, when the search giant reached a groundbreaking settlement with authors and book publishers: Google agreed to pay $125 million to settle two copyright suits over its book-scanning efforts in exchange for the right to make available millions of out-of-print books - including unclaimed works - for reading and purchasing online. Authors and publishers would get 63 percent of the revenue from digital book sales and from advertising sold to accompany online user searches of the material; Google would keep the rest.

The Google Book Search agreement was widely hailed as a victory for all sides - authors, publishers, readers, and Google. But as the months passed, trickles of doubt about the initiative began to bubble up, concerns that would eventually converge into a flood of opposition. And so once again Reback found himself in the middle of a huge dogfight against a technology giant.

"The Google settlement flew under the radar for awhile, even for me," he now says. "But the more I looked at it, the more perplexed and agitated I became. It looked like it was going to affect a whole lot of different markets - libraries, the future of digital books, search, and search advertising."

Reback and others would come to argue that the terms of the Google settlement threatened competition and consumer choice in virtually every field touched by the Internet. How, they asked, could a competitor possibly hope to overcome Google's enormous head start? Even more worrisome, rivals would be disadvantaged without the exclusive protection from copyright liability that Google secured in the settlement. Of course a company could always launch a book-scanning project of its own. But doing so would expose it to the same copyright infringement claims that Google once faced, risking damage awards of up to $150,000 per infringed work.

"The Google library is going to be different from any library that you or I frequent," says Reback. "It's a private library, and it's a for-profit operation. So if it's a private library making private rules and run to make a profit, why in the world should it be run as a monopoly?"

The Google Book Search settlement sprang out of a class action filed in 2005 by the Authors Guild, which represents about 8,000 of the nation's published authors and screenwriters (The Authors Guild, Inc. v. Google Inc., No. 05-Civ.-8136 (S.D.N.Y. filed Sept. 20, 2005)). That suit, as well as a separate action by the Association of American Publishers, a book industry trade association, contended that Google's practice of scanning books from libraries for use in its free online Book Search service violated copyrights. The two suits, coordinated for discovery soon after filing, would remain linked for settlement purposes.

Google cofounder Larry Page scanned the first book for the project in 2002 and soon launched an ambitious program to create an index of published works that would be as easy to search as the Internet. Announced in 2004, the Book Search service promised to track down specific information in books and direct the searcher to hard copy volumes housed in libraries and bookstores. Consequently, the suits filed in 2005 by authors and publishers centered on questions of fair use.

"The class action involved a simple, narrow question: Does scanning a book for the purpose of making an index constitute copyright infringement or not?" notes Pamela Samuelson, a law professor at UC Berkeley and codirector of the Berkeley Center for Law and Technology. "Although that's a legally complex issue, it's very precise."

The proposed settlement of the combined cases, filed after two-and-a-half years of negotiations between Google and the plaintiffs, turned out to be anything but simple, stretching to 134 pages and 15 appendices. It also contained provisions that seemed to go well beyond issues of fair use.

The terms gave Google the right to sell access to digital versions of individual works, as well as to offer subscriptions to libraries and other institutions for access to the entire digital collection. They also create a new class of potentially millions of authors and publishers who have not come forward to make a copyright claim on their out-of-print works - because either the author didn't respond to inquiries or has died, the publisher has gone out of business, or the original contract can't be found. Google would be granted a perpetual right to scan and sell access to these "orphan works." No one knows exactly how many of these exist; estimates range from about 500,000 to several million. Google estimates that ultimately about 10 percent of its scanned library will be orphans.

Under the agreement, if no copyright holder comes forward to claim a work, Google can still commercialize it: The company can display up to 20 percent of an orphaned work for free, and offer the entire book in subscription deals to libraries and to individual buyers.

To critics, the settlement effectively locked in the ground rules for the emerging digital books market, to Google's considerable advantage. What initially appeared to be a class action settlement involving a set of aggrieved rights holders became a privately negotiated compulsory license designed to monetize millions of out-of-print works.

"This settlement is extraordinarily audacious," says Samuelson. "The parties used the class action to essentially negotiate for all kinds of uses, including future uses not yet envisioned. It creates institutions that really don't have anything to do with the underlying lawsuit. And by the time the lawsuit was proposed to be settled, the class included essentially all the rights holders in the world for books."

Samuelson was among the first to organize opposition to the Google settlement. In February 2009, she convened at UC Berkeley a private meeting of stakeholders who stood to lose by the settlement, chief among them libraries and research institutions. The fear was that if Google emerged as the only source of a truly comprehensive digital library of books, these institutions would face the expensive prospect of having only one vendor from which to purchase access.

Google, of course, portrays the pact in a much different light. "We think that the settlement is an amazing deal with huge benefits for authors and for readers," says Daphne Keller, managing product counsel for Google Books. "It's going to unlock access to millions and millions of books. It's going to make it so that the rights holders can get revenue from books that aren't in circulation anymore, and also give them a way to control how those books are used."

Google cofounder Sergey Brin added his voice to the debate, as well. "In reality," he wrote in an op-ed piece for the New York Times last October, "nothing in this agreement precludes any other company or organization from pursuing their own similar effort. [It] limits consumer choice in out-of-print books about as much as it limits consumer choice in unicorns. Today, if you want to access a typical out-of-print book, you have only one choice - fly to one of a handful of leading libraries in the country and hope to find it in the stacks."

In fact, Google maintains, the settlement terms actually facilitate competition by creating a Book Rights Registry set up specifically to help Google's competitors license published works. The Registry would establish a public database listing which rights holders own which titles, making it much easier for competitors to come forward and cut their own deals. Only works to which no one has laid claim would be excluded.

"For those books, the settlement says that they can be licensed to a third party to the extent permitted by law," says Google's Keller. The catch: "[W]e just don't think there's a way for that license to happen with the way that class action law stands now. But if the law changes or there are new copyright rulings or Rule 23 rulings that make it permissible, the settlement does everything in its power to make it possible for those works to be licensed out." Keller says just "a small number" of books is involved, and they're not necessarily orphans. "It might be that if you put a couple of hours into it, you can find the owner."

As for true orphan works - out-of-print books whose rights holders can't be located even after a targeted search - Google is hoping Congress will clarify their status with legislation.

The settlement has drawn support from a number of parties outside the litigation. The head librarians at Stanford, Cornell, and the University of Michigan, for example, all support the agreement as the best way to make the knowledge of the world easily available to students and researchers.

And the National Federation of the Blind backs the settlement because the digital book repository will open up access to books for those who cannot read print. (Digital versions of books can be fed through a screen reader, a software program that reads displayed text aloud with a speech synthesizer.) Sony Electronics, which sells an e-reader, is also on board; it says the deal will "dramatically enlarge and diversify the universe of available e-books." (Sony already has cut a separate deal with Google that gives its customers free access to more than half a million digital books.)

Still, by the spring of 2009 critics' concerns about the Google Book Search settlement had caught the attention of the DOJ, which in April launched a formal inquiry into the antitrust implications of the agreement. Then, just a few weeks later, Gary Reback jumped into the fray.

To Reback, the Google settlement seemed just a subtler version of Microsoft's game plan in the 1990s. In the Microsoft case, Reback authored a widely read white paper opposing the company's acquisition of Intuit. As counsel for the Anonymous Amici, he challenged the DOJ's first consent decree with Microsoft; that effort in turn convinced the feds to prosecute the company.

So how did Microsoft end up joining forces with Reback this time around? Peter Brantley, the director of the BookServer Project at the nonprofit Internet Archive in San Francisco, says it took some persuading. "I had an uncomfortable phone conversation with Microsoft," Brantley recalls, "where I basically said 'I think you guys should talk to Gary Reback. And Microsoft was like, 'Gary Reback? You want us to talk to Gary Reback?'"

"It took Microsoft awhile to get back to me," Reback says with a sly smile. "Finally, after about two weeks, they called me and said, 'OK, we're willing to participate, but you're going to have to put together a broad group. We don't want anyone thinking it's our group. This is your group.' "

True to his word, Reback did bring together a diverse set of players, which became known as the Open Book Alliance. The New York Library Association and the Special Libraries Association joined, as did the National Writers Union, representing mostly freelance and contract writers outside the Authors Guild who were bound by the settlement's provisions even though they'd been excluded from the negotiations.

The Internet Archive opposed the settlement as well, believing that the preservation of books in digital form is too important a cultural task to be handed over to a single commercial enterprise. Brantley says his organization - which offers a collection of texts, audio, moving images, and software - aims to facilitate "the broadest possible access to the greatest amount of information."

Other groups that filed objections, including the ACLU and the Electronic Frontier Foundation, feared for the privacy of users conducting online book searches. "The big worry is that government or law enforcement will find the Google digital books repository to be a treasure trove of information about people's reading habits and interests," says Aden Fine of the ACLU. "Experience and history have shown that law enforcement will try to obtain reader information if it exists. That's why protections need to be put in place now."

As spring turned into summer, even more players became aware of how the Google settlement might affect them. The federal court for the Southern District of New York, where the case was filed, fielded objections from all over the world. Groups in France, Germany, and China objected to Google's scanning of books that are under copyright in their respective countries, complaining that the settlement illegally incorporates works that have never been published in the United States.

One brief authored by Reback himself crackled with trust-busting indignation: "Google and the plaintiff publishers secretly negotiated for 29 months to produce a horizontal price fixing combination, effected and reinforced by a digital book distribution monopoly. Their guile has cleared much of the field in digital book distribution, shielding Google from meaningful competition."

Last September the Justice Department weighed in with its own objections to the Google settlement. Though the DOJ praised Google's efforts to create a lasting digital library, its brief echoed some of the same points that opponents had been raising for months. "As presently drafted, the Proposed Settlement does not meet the legal standards this Court must apply," the DOJ stated in its filing. "In the view of the United States, each category of objection is serious in isolation, and, taken together, raise cause for concern."

In particular, the Justice Department noted that the deal "appears to give book publishers the power to restrict price competition" and grants Google "de facto exclusive rights for the digital distribution of orphan works." The filing also stated that "other digital distributors may be effectively precluded from competing with Google in the sale of digital library products" and yet-to-be-developed products.

Picking up on these and other concerns, U.S. District Judge Denny Chin delayed an October hearing on the settlement. "The current settlement agreement raises significant issues, as demonstrated not only by the number of objections, but also by the fact that the objectors include countries, states, nonprofit organizations, and prominent authors and law professors," Judge Chin wrote. It was time to go back to the drawing board.

On November 13, Google and the plaintiffs returned with an amended agreement, dubbed by some as Settlement 2.0, which closely tracks the DOJ's list of concerns. The revised settlement provides for a guardian to represent the rights holders of unclaimed books. Yielding to the DOJ's insistence that the money generated from orphan works not go to Google and the plaintiffs, it stipulates instead that the revenue be spent on efforts to search for the unidentified rights holders; after being held for ten years, any unclaimed funds could be distributed to literacy groups. The new version also restricts the settlement's scope: No longer global in reach, it applies to orphan works from only certain English-speaking countries - the United States, Canada, the United Kingdom, and Australia. Further, it specifies that Google will share none of the personal information it collects about users without a valid legal process. Judge Chin gave preliminary approval to the amended settlement a week later and set a final hearing for February; Amazon's request for reconsideration was turned down. (See Authors Guild v. Google Inc., 2009 WL 4434586.)

"There are an awful lot of people affected by the settlement, and there are bound to be people who disagree," acknowledges Google's Keller. "But this settlement was negotiated by zealous advocates for authors and publishers who have every motivation to do right by their clients. And they got what they think is a great deal."

"Our authors overwhelmingly approve," confirms Paul Aiken, executive director of the Authors Guild. "The basic concept of the settlement came from us. We felt that as long as individual authors gained control over their works, we had a very good deal."

But the revised agreement doesn't remove Google's exclusive immunity from lawsuits by rights holders to unclaimed works, and for the Open Book Alliance that remains a serious concern. Under the amended settlement, Google would retain the right to digitize and commercialize orphaned works without liability - a right enjoyed by no other company. Which means that to build a competing corpus of digital works, rivals still would have to engage in litigation - potentially good news for lawyers, but a nearly insurmountable barrier to entry. The Open Book Alliance deemed the revised agreement a "sleight of hand ... designed to serve the private commercial interests of Google and its partners."

"This revised agreement doesn't change anything," Reback declares. "The problems that were there before are still there. So this isn't over."

In an amicus brief filed in late January, in fact, the Open Book Alliance advanced a new objection to the settlement: Not only is Google improperly attempting to control the emerging digital books market, the alliance claims, but it also is using the settlement to fortify its supremacy in the search market, where it already enjoys a monopoly share. One side of the business strongly reinforces the other, Reback argues. And in February, the Justice Department echoed that argument in a statement of interest that also voiced the government's ongoing concerns about the implications (and promise) of the project.

This time, however, Google dug in its heels and filed a rebuttal defending the settlement. The company continues to insist that it is simply undertaking normal business risks and investments necessary to improve its services.

What, then, do the settlement's strongest critics really want? In mid January, the Open Book Alliance proposed that Congress establish a digital public library, run by a neutral nonprofit group (such as the Library of Congress) rather than a commercial entity. The repository could be similar in structure to Gallica, the database of mainly French works administered by France's national library, the alliance suggested.

Reback has in mind another remedy: Make Google license the millions of scans it's already completed to competitors - for a fee. That way authors and publishers would still be compensated for their work, but consumers would be able to buy access to the digital collection from a variety of vendors. (Nondiscriminatory compulsory licensing has a long history in technology, Reback points out. It stretches back to a 1956 government consent decree that forced AT&T's Bell Laboratories to license its patented transistor technology to any company that wanted it for $25,000. Inventor William Shockley used the licensed technology to build the seminal semiconductor that eventually begat Intel, the world's largest chip maker. Notes Reback, "That's literally where Silicon Valley comes from - an anti-trust settlement.")

However the Google Book Search litigation ends up, the critics have at least managed to change the terms of the public debate. When it was first announced, Google's ambitious plan to build a digital library for the ages seemed like an act of unalloyed goodness. Now, to a growing number of observers, it seems problematic. Some would even say it's just the kind of thing that the old Microsoft would do.

Tom McNichol is a San Francisco?based freelance writer.

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