Consumer Watchdog – Consumer Group Calls On Justice Department To Intervene In Google Book Settlement

"Orphan Works" provision and "Most Favored Nation" Clause Raise Antitrust Concerns

Santa Monica, CA -- Google’s proposed settlement with authors and publishers raises antitrust concerns, Consumer Watchdog said today and the nonpartisan, nonprofit group called on the U.S. Department of Justice to intervene.

In a letter to Attorney General Eric Holder and other Justice officials Consumer Watchdog asked the department to seek a delay of the settlement until a “most favored nation” clause favoring Google is removed and the deal’s  “orphan works” provision is extended to cover all who might digitize books, not only Google.

“This settlement was negotiated by the parties in the suit and there has been no opportunity to represent and protect the broad interests of all consumers,” said John M. Simpson, a consumer advocate with Consumer Watchdog. “This deal simply furthers the relatively narrow agenda of Google, The Authors Guild and the Association of American Publishers.”

Read the letter here.
 
The proposed settlement  announced last year creates the nonprofit Book Rights Registry to manage book digital rights issues.  Here are the  the deal’s two most troubling aspects, Consumer Watchdog said:

-- A “most favored nation” clause guarantees Google the same terms that any future competitor might be offered. Under the most favored nation clause the registry would be prevented from offering more advantageous terms to , for example, Yahoo! or Microsoft, even if it thought better terms would be necessary to enable either to enter into the digital books business and provide competition to Google.  It is inappropriate for the resolution of a class action lawsuit to effectively create an “anti-compete” clause, which precludes smaller competitors from entering a market. Given the dominance of Google over the digital book market, it would no doubt take more advantageous terms to allow another smaller competitor to enter the market.
 
-- The settlement provides a mechanism for Google to deal with “orphan works.”  Orphan works are works under copyright, but with the rights holders unknown or not found.  The danger of using such works is that a rights holder will emerge after the book has been exploited and demand substantial infringement penalties. The proposed settlement protects Google from such potentially damaging exposure, but provides no protection for others.  This effectively is a barrier for competitors to enter the digital book business.

The most favored nation provision should be eliminated to remove barriers of entry and the the orphan works provision should be extended to cover all who digitize books, Consumer Watchdog said.
 
The settlement is the result of a class action suit brought against Google by The Authors Guild and The Association of American Publishers.  Members of the class have until May 5 to file objections. A federal judge will review the settlement in June.

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Consumer Watchdog, formerly the Foundation for Taxpayer and Consumer Rights is a nonprofit, nonpartisan orgainzation with offices in Washington, DC and Santa Monica, Ca.  Our website is: www.ConsumerWatchdog.org