June 11, 2009

Federal Agencies Examining Google In Book Deal

The U.S. Justice Department has sent an official notice to Google Inc informing the internet giant that federal antitrust attorneys are investigating its settlement with publishers intended to make millions of books available for online readers.

When reporter's asked Google's Chief Legal Officer David Drummond whether the company had received the civil equivalent of a subpoena, he replied: "Yeah, we did."

According to a Wall Street Journal report on Tuesday, publisher Lagardere's Hachete Book Group has also received official requests for information from the Justice Department's antitrust division.

According to the proposed deal made last October between Google, the Authors Guild and the Association of American Publishers, Google is set to dish out $125 million for the rights to create a Book Rights Registry, in which both authors and publishers would be able to register works and receive financial compensation from subscriptions or book sales.

Google's vision was to create a massive digital library, where readers are able to browse through millions of copyrighted books online, read selected passages and purchase copies.

Drummond said he expected that the federal court examining the settlement and the Justice Department would be working parallel to each other.

"It's a separate question from the approval of the class action settlement," he explained. "The judge's job is not to review every question that the Department of Justice might think about."

He also noted the possibility that the settlement may be in for some minor modifications if need be. "We're open to that sort of thing [...] if it's a compelling argument. We haven't heard it," Drummond said.

In April, two experts in the field of media digitization told Reuters that both the U.S. Justice Department and a number of states attorneys general had been inquiring into the details of the settlement.

In a separate affair, the Justice Department is also looking into agreements made between Google and other tech businesses intended to prevent them from snatching each other's employees.

Google, Yahoo, Microsoft, Apple and biotech company Genentech, have all received notices from the Justice Department that an official probe is under way, according to a source who spoke on condition of anonymity.

One of the main concerns under examination by the U.S. Federal Trade Commission surrounds Google and Apple Inc's overlapping board members.

Experts say that the string of federal investigations is a sign that the Justice Department's antitrust division under new Obama-appointed chief Christine Varney will be more aggressive than its predecessors.

In a recent speech in which she outlined her basic antitrust philosophy, Varney vowed to take a more aggressive approach in dealing with large companies that use their market power to eliminate competition.


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