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Is Google's culture grab unstoppable?

Monopoly Money from Digital Books

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Google dealt itself a powerful piece of the future in the proposed settlement of the "Google Books" case in 2008.

The plaintiffs, the Authors Guild and the Association of American Publishers, permitted Google to pay itself to build a proprietary technology infrastructure for a "Book Rights Registry". This effectively creates a single purpose author's society, but one that grants licenses to one user - Google. While nominally "non exclusive", there's little incentive for competitors - a formidable position. Let's have a look at how Google is set to own the Digital Book.

Google pays itself $34.5m of the $125m settlement to "provide reasonable technical assistance with respect to the design, development and maintenance of the Registry". Google's control of the registry’s operation places Google in a very powerful position against even its largest natural competitors.

The $125m buys Google - and only Google - permission not just to scan books for indexing purposes, but also to expand Book Search further. As the EFF noted, "if Google can strike a settlement with a large slice of the aggrieved copyright owners, then it solves the copyright problem for itself, while leaving it as a barrier to entry for [Google’s] competitors."

The British Booksellers Association, anticipating that Google will attempt to impose the registry on UK authors and publishers, agreed:

"As such a dominant player in the online world, Google will now occupy a unique gateway position that, if abused, could easily create a de facto monopoly. A situation where competition is removed from the market place by placing the keys in the hands of one company cannot, ultimately, be good for the consumer. This is a bridge too far," the British Booksellers Association noted.

An Most Favoured Nation Unto Itself

So how does Google’s nominally "non-exclusive" registry arrangement foster competition? That's hard to see.

If a competitor tried building a competing book registry by negotiating licenses for in-copyright works, that competitor would have to bear the startup costs — and the cost of licensing. If the competitor is rewarded for respecting authors’ rights by obtaining favorable terms, that advantage can be taken away by Google. Why? Because one of Google’s goodies from its dominant position in the settlement negotiation is “most favored nations” price protection.

The registry is contractually required to offer Google any better terms it would give to anyone using any data or resources that Google provides the registry, or that is of the type that Google provides. So even if a competitor wants to build a parallel infrastructure from scratch, and wasn’t using any of Google’s data—any reward for their legitimacy would be trumped by Google’s MFN. There is no advantage in “doing it right” except a clear conscience—an MFN inhibits competition.

There are several potential competitors, but fewer than a year ago. Microsoft abandoned its book scanning program earlier this year (although Microsoft constrained itself to scanning books with permission unless clearly in the public domain). It might be a good guess that uncertainties due to litigation affected Microsoft’s decision.

How about Yahoo!’s Open Content Alliance? Google leads OCA in scanning, and then there’s Google’s MFN. Now that may be kind of interesting to regulators. As one commentator noted, "[a]s a condition of settlement approval, the Registry should be required to negotiate and sign an antitrust consent decree with the Department of Justice.” Since ASCAP and BMI each already operate under consent decrees, there is a predicate for Justice Department scrutiny and "rate court" oversight of the registry, particularly given Google's market domination. Why should societies have to suffer the rate court burden when Google does not?

Who is left? Europeana, the European digital library and cultural museum, is possibly the most interesting potential competitor to Google Books. The idea of a European organization duking it out with an advertising machine in a battle over who can offer the public the best cultural opportunity has a certain appeal.

Europeana is a rich archive working cooperatively with its cultural partners. The secular Europeana may not be Sergei Brin’s "mind of God", but it has attracted an impressive list of European museums and libraries nonetheless - with no advertising or back door scanning. Europeana is a neutral participant in the quest for online access to culture, and that's a neutrality that registries should emulate.

Now to the technology - which is troubling to advocates of free and open systems and protocols.

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