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September 21, 2009

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Digital book rights deal stifles competition, says US agency

THE United States Justice Department advised a federal judge on Friday that a proposed legal settlement giving Google Inc the digital rights to millions of out-of-print books threatens to thwart competition and drive up prices unless it's revised.

The brief filed in New York federal court marks the first time that the Justice Department has publicly shared its thoughts about Google's agreement with a large class of American authors and publishers.

The top US law enforcement agency began looking at the Google book settlement this summer amid a loudening outcry against an agreement affecting a reservoir of human knowledge.

"The breadth of the proposed settlement ... raises significant legal concerns," the Justice Department wrote in its 28-page filing with US District Judge Denny Chin.

Hope for compromise

Still, the agency expressed confidence that Google and the author and publishers could negotiate changes so the settlement will adhere to US copyright and antitrust laws.

The Justice Department told Chin it hopes an acceptable compromise can be worked out because the agreement "has the potential to breathe life into millions of works that are now effectively off limits to the public."

Even with that encouragement, the agency warned Chin it probably will conclude the deal breaks federal antitrust law unless changes are made.

While other critics such as Inc and Microsoft Corp - both rivals of Google - also have objected in recent weeks, the Justice Department's opinion presumably will carry more weight with Chin.

Chin's approval is needed before the US$125 million settlement can take effect, a hurdle that could be more difficult to clear with the Justice Department's assertion that the agreement would violate laws.

"We are considering the points raised by the department and look forward to addressing them as the court proceedings continue," Google said in a joint statement with the Authors Guild and the Association of American Publishers.

Critics seized on the agency's brief as validation of their arguments urging Chin to block the settlement.

"The current settlement proposal would stifle innovation and competition in favor of a monopoly over the access, distribution and pricing of the largest collection of digital books in the world," said the Open Book Alliance, a group including Microsoft.


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