Google Books Settlement Facing Scrutiny

Concerns center on possible monopoly, invasion of privacy

By Jon Hood
ConsumerAffairs.com

September 13, 2009

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The proposed Google Books settlement, once hailed by Google cofounder Sergey Brin as giving consumers unprecedented access to “the tremendous wealth of knowledge that lies within the books of the world,” is getting decidedly negative reviews from a number of industry players and government agencies, with concerns about monopolies and consumer privacy at the top of the list.

Google was hit with a lawsuit in 2006, accused of copyright infringement for offering over 10 million protected works to the public free of charge. The search behemoth settled the lawsuit in October of last year, agreeing to pay $125 million in what it called an “historic” deal that would benefit consumers. Under the agreement, Google would give publishers about two-third of revenues made from selling access to out-of-print works, keeping 37% for itself.

The settlement was hailed as the first step toward allowing consumers to search for and buy out-of-print books, and provided that U.S. libraries would have free access to Google's master database. In testimony before Congress, Google's chief legal officer David Drummond added that bookstores and online booksellers like Amazon.com would be able to sell access to Google's database “on any Internet-connected device they choose.”

The settlement is now facing increasing scrutiny as it awaits final court approval. A key point of contention is a section permitting Google to scan and store “orphan books” -- those that are no longer in print but still protected by a valid copyright -- without first securing permission from the works' copyright holders.

Marybeth Peters, head of the U.S. Copyright Office, told Congress that the “settlement would give Google a license to infringe first and ask questions later,” and added that the agreement makes “a mockery of Article One of the Constitution, that anticipates that authors shall be granted exclusive rights.”

John M. Simpson of Consumer Watchdog, a California-based non-profit, said a key problem is the unfair competitive advantage Google receives under the settlement that comes from its attempt to pull an end-run around the appropriate legislative solution to the orphan books problem. “This is not an issue for a court and certainly one that cannot be settled by solving the problem for one large corporation and no one else,” he said in testimony before the House Judiciary Committee last week.

He said the problem is Google’s monopolistic digital library and how it would be implemented. “The proposed class-action settlement is monumentally overbroad and invites the court to overstep its legal jurisdiction, to the detriment of consumers and the public,” he said. “The proposed settlement agreement would strip rights from millions of absent class members, worldwide, in violation of national and international copyright law, for the sole benefit of Google.”

Google's competitors -- Microsoft, for example -- are also crying foul, claiming that the provision allowing Google to store orphan books would amount to a veritable monopoly on that market. Amazon executive Paul Misener told SF Gate that, while his company also scans and stores orphan books, it first secured permission from copyright holders. “We went to the rights holders, and one by one, negotiated deals,” Misener said.

Misener likened Amazon's interest in blocking the settlement with its interest in network neutrality. He said the settlement would give Google an advantage rather than provide a level playing field. "Under the proposed settlement, Google would become a consumer's nightmare: the only store in town," he said.

In a move aimed at quelling such criticism, the settlement agreement provides that funds for orphan books would be held in escrow for five years, or until the copyright owner claims the book. Additionally, Google has agreed to spend $34.5 million to create a registry in an effort to locate those owners.

Privacy concerns

Google is also under fire from privacy advocates, who insist that the agreement will do nothing to protect consumers. The Electronic Privacy Information Center (EPIC) sought to intervene on behalf of consumers' privacy rights, apparently unswayed by Google's newly released privacy proposal.

That proposal, pitched to the Director of the Bureau of Consumer Protection, stresses that Google would not share users' information with third parties “except under very limited and narrow circumstances,” which would be explicitly set forth in the final privacy proposal. According to Google, those “narrow circumstances” are limited to situations where Google shares information “with trusted entities that process information on our behalf” or to prevent physical or financial harm. Google also promised to enact “protections to limit the information ... available to credit card companies about book purchases.” Privacy advocates point out that these measures are informal and not legally binding, and thus afford consumers little real protection.

The amount of data that Google could amass about a reader’s behavior is unprecedented, Consumer Watchdog's Simpson said. It could be commingled with data from other Google services posing a new threat to user privacy and flies in the face of the U.S. tradition of privacy regarding reading habits, he argued.

"Consumer Watchdog supports digitization and digital libraries in a robust competitive market open to all organizations, both for-profit and non-profit, that offer fundamental privacy guarantees to users,” Simpson concluded. “But a single entity cannot be allowed to build a digital library based on a monopolistic advantage when its answer to serious questions from responsible critics boils down to: “Trust us. Our motto is ‘Don’t be evil.’”

Its its defense, Google notes that it has taken measures to protect privacy in the past. The company blurs certain locations on Google Maps – including, until January, the Vice President's residence in Washington -- and its privacy policy says that personal information required for customers to log in is not shared with third parties, although it makes an exception for “trusted” parties.

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