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Intellectual Property

What Do DOJ's Google-Book-Deal Views Signal?

DOJ's 28-page Statement of Interest to the Court responsible for deciding the fate of the Google Book Settlement speaks volumes. 

First, it ensures the current proposed settlement is effectively dead.  

  • It is hard to conceive a U.S. Federal District Court Judge approving a settlement, which the United States Government indicates may be illegal under three completely different bodies of law (class action, copyright and antitrust), and also may be per se illegal in multiple different ways.

Second, despite the DOJ's encouraging tone in the press release, the DOJ statement itself set a very high bar for the parties to overcome. Substantively, the DOJ is insisting on radical changes in the settlement that practically would gut the unique and self-serving going-forward public benefits of the deal for the parties.   

  • In a nutshell, the DOJ's is effectively urging the deal be radically pared back from covering:
    • ~All books -- to just books-in-print (a fraction of the seven million books Google has copied);
    • U.S. and foreign works -- to just U.S. works;  
    • Scanning and all derivative uses -- to just scanning and snippets;
    • Retrospective and prospective impacts -- to retrospective and heavily-scaled-back prospective impacts; and  
    • Just the parties who get special public benefits -- to enabling most outsiders to share equally in the settlement's public benefits. 

Third, it raises the question if there is still a basis for the parties to settle, because the DOJ recommended fixes fundamentally and substantially limit what the parties can extract from the settlement.

DOJ is formally investigating another Google deal

An unusual and notable pattern appears to be developing with Google and DOJ antitrust enforcers. 

  • Twice in less than a year, the DOJ has formally investigated Google for trying to anti-competitively extend its monopoly market power via a market agreement.
    • It is unusual for the DOJ to seriously investigate a single formal market agreement/settlement for anti-competitive behavior because normally antitrust lawyers can convince a company's leadership to stay away from the anti-competitive line that possibly could prompt a DOJ investigation and/or suit.
    • What is exceptionally unusual is for a company to propose two non-merger-related market agreements in less than a years time that prompt serious antitrust investigations from the DOJ.
  • Today, the DOJ Antitrust Division wrote a letter to the Federal Judge overseeing the Google Book Settlement deal "to inform the court that it has opened an antitrust investigation into the proposed agreement between Google and representatives of publishers and authors... we have determined that issues raised by the proposed settlement warrant further inquiry."

This is the second formal agreement in less than a year that Google has negotiated and drafted that has "crossed the line" prompting DOJ antitrust officials to have to formally and publicly investigate. 

Rolling Admissions the Book Settlement is Anti-competitive

Google has begun to admit and make concessions that the Book Settlement it originally negotiated with authors and publishers is anti-competitive.

To try and win the support of the biggest libraries, Google has now cut a potentially exclusive side deal giving the largest libraries the benefit of a price oversight/arbitration mechanism per the New York Times.

The Broader Implications of DOJ's Book Settlement Investigation

The DOJ investigation of the Google Book Settlement suggests that a broader antitrust spotlight may be returning to Google.

  • Apparently the DOJ is investigating whether the Book Settlement sets a competitive or anti-competitive trajectory for the search of digitized books, and of "orphan works in particular.
    • Google argues the settlement is pro-competitive and increases access to books.
    • The DOJ's antitrust investigative scrutiny suggests otherwise. 
  • Since little involving the Internet happens in a vacuum, this antitrust investigation may have much broader implications than most appreciate for:
    • The new Administration's overall antitrust approach;
    • The FTC's oversight of behavioral advertising, and
    • The FTC/Congress' focus on online privacy.   

To start however, it is important to get an update of important facts since antitrust is so fact-driven. Recent facts only confirm and bolster the DOJ's public assessment 11-05-08 that Google had monopoly market power in search advertising and search advertising syndication.

Cracks in the Google Book Settlement

Cracks are appearing in the foundation of the Google Book Settlement, which suggests some of it may end up crumbling under the current harsh weather of public scrutiny.

The most recent crack to appear was the Court's quick rejection of Google's preemptory proposal to extend the opt-out notice period for authors for another sixty days, and quick approval of the request by a small coalition of rights holders for four more months until September 4th.  

  • This suggests that the court was not impressed with Google's effort to date to notify potentially affected authors, a key component of good faith in the proposed settlement.

An ITIF forum on the Google Book Settlement at the Library of Congress last week exposed some other big cracks in the foundation of the settlement.

The Cloudy Future of Digital Knowledge

The proposed seminal book settlement of the publishers/authors class action suit against Google, if ratified by Federal Court this June, has the potential to de facto legislate for the U.S. and much of the world, both the monetization mechanism and competitive trajectory of much of the digital books market -- a highly strategic segment of the world's digital knowledge base.

  • The competitive stakes are high because books represent some of the highest quality searchable content available in the world.
  • Moreover, the seven million books digitized by Google and covered by the settlement dwarf any other digital library in the world.
  • Furthermore, the settlement would de facto grant Google exclusive control over the "orphan works" covered by the settlement, which comprise the vast majority of the seven million digitized books.

 

As an expert analyst on the future of Internet competition, the central question I ponder is whether the mechanism and trajectory that the Google book settlement would entrench -- is competitive or anti-competitive?

  • More simply, is antitrust pertinent to the Federal court's disposition of this proposed copyright-infringement settlement?
  • The facts and analysis show antitrust is highly relevant to this potential supra-constitutional, court-created, digital book marketplace.

First, the core facts suggest antitrust concerns are relevant to the ratification process of the proposed digital book settlement. 

Internet "history is written by the victors?" -- or is it "to the victor go the spoils?"

Winston Churchill prophetically said: "history is written by the victors." This truism is timely now given Eric Auchard's great column "How the web devours history," that I built upon in my latest post: "Will history be the casualty of an 'ecommony?' If info is free who will pay to archive it for posterity?" 

Given the Internet's natural first-mover dynamic, global scale and scope efficiencies and powerful reinforcing network effects, which I have written extensively on, could the Internet's 'victor' effectively write history by deciding what information ultimately gets archived and found?

To answer that question requires establishing some important baseline points.

Will History be a Casualty of an "Ecommony"? If info is free who will pay to archive it for posterity?

Kudos to Eric Auchard's Reuters column for triggering a whole new line of thinking in his brilliant piece: "The Black Hole, how the web devours history." His column is a must read for anyone who cares about history and historical archives, because it brings to life the real-world problems of ensuring that key historical information is permanently archived and retrievable via the Internet.

The more I noodled on Mr. Auchard's thought-provoking premise, I concluded that the origin of this devoured-history problem is not technology, which many might prematurely conclude, but the "information wants to be free" ethos of the digital commons.

I am on the CPAC Technology panel today at 2:30

I am on the Conservative Political Action Conference (CPAC) panel on technology today at 2:30 today.

The title of the panel is: "Technology and Policy, Cutting edge Conservative Thought."

I plan to talk about my new white paper: "Neutralism: Identifying the Ideology behind Net Neutrality." From the paper:


  • "Simply, neutralism is the commons ideology behind the net neutrality movement. Neutralists believe that digital information and communications networks should be a public commons, not private property requiring permission or payment to use. Neutralists believe that:

    ·           Digital technology, if unshackled from ownership restrictions and payment requirements, is a powerful means for creating a more egalitarian society;

Google is indeed a media company!

Miguel Helft/The New York Times has figured out that Google is indeed a media competitor, but apparently doesn't think other media have connected the dots -- given how they framed their lead business article today: "Is Google a Media Company?"

While its obvious that Helft/NYT get the joke that Google is most certainly a media company by the prominence, graphic, and headline of the story, they also did their journalistic duty in presenting both sides of the question, including allowing Google a lot of space to continue its charade that Google is not a media company.

Let's have some fun with Google's "who? little old us? a media company? you must be kidding..." --defense in the New York Times article.

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Q&A One Pager Debunking Net Neutrality Myths