Politics and Law

AT&T has taken off the boxing gloves in its fight against the Google Voice service and proposed changes to Net neutrality rules.

In a letter sent to the FCC (PDF) on Wednesday, AT&T went on the attack to portray Google as a powerful company that's trying to fool the FCC into believing that the rules shouldn't apply to it.

In the letter, AT&T is trying to cover all of its bases. This means that, at times, it's hard to follow which arguments it's trying to make--the one about Google Voice or the one about Net neutrality. And it doesn't help that AT&T stoops a little low by referencing a convent of Benedictine nuns in a list of those hurt by having calls to their numbers blocked to and from Google Voice numbers.

Read more of "AT&T to FCC: Close loopholes and write rules that apply to Google, too" on ZDNet's Between the Lines.

Should Google Voice have to follow the same rules as AT&T?

(Credit: Screenshot by Tom Krazit/CNET)

The Federal Communications Commission is looking into how Google Voice treats calls to certain rural areas that landline phone companies are required to connect.

AT&T placed this complaint before the FCC, accusing Google of failing to live up to the Net neutrality rules it has long supported before the U.S. government. On Thursday, several members of Congress implored the FCC to look into the matter, and their concerns have been heard, according to a report from the Associated Press that Google has confirmed.

The dispute is over Google's practice of blocking calls to certain rural phone networks that are allowed to charge a disproportionately high rate for calls connected to those networks. Some rural carriers, in a practice known as traffic pumping about which AT&T has long complained, partner with companies that draw a high volume of network traffic, such as phone sex operators and conference-calling firms, charge a much higher connection rate, then split the revenue with them.

AT&T is required to connect such calls because it is considered a "common carrier" that is required to ensure open access to networks that were created with public money. "By openly flaunting the call-blocking prohibition that applies to its competitors, Google is acting in a manner inconsistent with the spirit, if not the letter, of the FCC's fourth principle contained in its Internet Policy Statement," Robert Quinn, AT&T's senior vice president focusing on federal regulation, said in a statement last month when it filed its original complaint with the FCC.

Google argues that it is not subject to the same laws because it's a software company and because Google Voice doesn't replace phone service; it still requires phone service to work properly. It addressed the inquiry in a blog post Friday.

"AT&T apparently now wants Web applications--from Skype to Google Voice--to be treated the same way as traditional phone services," wrote Richard Whitt, Google's Washington media and telecom counsel. "Their approach is what a former FCC chairman has called "regulatory capitalism," the practice of using regulation to block or slow down innovation. And despite AT&T's lobbying efforts, this issue has nothing to do with network neutrality or rural America. This is about outdated carrier compensation rules that are fundamentally broken and in need of repair by the FCC."

So now it appears that the FCC will attempt to referee the matter. Google's no stranger to federal authorities at the moment, with just about everything it does falling under the watchful eye of an administration that seems determined to examine dominant companies in the tech industry.

Microsoft's top lawyer said that a tentative agreement with Brussels announced earlier Wednesday could potentially allow the software maker to move out of the regulatory crosshairs, perhaps paving the way for regulators to shift their attention elsewhere.

"It's important for us to get closure in Europe on issues that have obviously been controversial for over a decade," General Counsel Brad Smith said in an interview. "Today's decision takes us an important step closer to doing that."

Smith

(Credit: Microsoft)

Microsoft initially took a much different approach to the European Commission's assertion that the inclusion of a browser in Windows violated antitrust law. The company had initially proposed just stripping out the browser from Windows 7 entirely, leaving users the prospect of trying to get a browser on their own. The software maker eventually backed down after indications that that approach was unlikely to fly.

While not final, Microsoft's moves would appear to resolve all of its outstanding regulatory issues with the Commission and were greeted warmly by regulators on Wednesday.

Although most of the early attention focused on the agreement around a browser "ballot screen," Microsoft also announced on Wednesday an agreement around product interoperability. Under that deal, a 10-year commitment by Microsoft, the software maker agrees to publish communication protocols and adopt certain standards as part of Windows, Windows Server, Office and other high market share products. Companies could also purchase for 5,000 euros a warranty that would subject Microsoft to court oversight and monetary penalties if it doesn't live up to its commitments.

Smith said that the approach Microsoft took with regard to interoperability was designed to adopt methods that Nellie Kroes, commissioner for competition, had outlined in a speech last year for how companies with high market share products should behave.

"I actually think this in effect implements the model that the Commission has been advocating," Smith said. Moreover, he said it is a model that other software companies should pay attention to, he said, noting that there are lots of companies that have high market share. He noted that Google has 78 percent of the paid search market and IBM has 100 percent of the mainframe market, while Adobe also has dominant positions in certain areas, such as Photoshop.

"It is important we believe to create a level legal and regulatory playing field," Smith said. "Everyone that has a high market share needs to respect the same set of rules. I think a number of these rules are likely to be applicable to other companies and other products."

Settling now with Brussels also could help Microsoft in its effort to win approval for its search deal with Yahoo, Smith said.

"This certainly isn't going to hurt when it comes to the Yahoo-Microsoft agreement," he said. "It's not necessarily going to make a huge difference. We didn't feel a particular step was needed to help it along."

Microsoft is in the process of trying to ascertain whether the deal needs approval from Brussels or from individual European antitrust authorities. It also needs approval from U.S. regulators, who have asked for more information on the deal.

An adviser to the European Union has sided with Google in the company's battle with Louis Vuitton and others over alleged trademark infringement.

The search giant is fighting a lawsuit in the European courts against several companies that claim Google is infringing on their trademarks by allowing advertisers to buy keywords that match those trademarks.

Led by LVMH's Louis Vuitton, the companies are upset that makers of imitation items can buy those keywords through Google's AdWords, allowing their products to pop up in searches alongside the genuine article.

But in a statement released by the European Court of Justice on Tuesday, adviser and Advocate General Poiares Maduro said that "Google has not committed a trademark infringement by allowing advertisers to select, in AdWords, keywords corresponding to trademarks."

Maduro's opinion is that the use of trademarks is limited to the selection of keywords internal to AdWords and as such only concerns Google and its advertisers. When selecting keywords, no product or service is being sold to the public, therefore, neither Google nor its advertisers are infringing on any trademarks, said Maduro.

In response to the concern that makers of imitation products can grab certain keywords, the Advocate General put the responsibility firmly in the hands of consumers.

"The mere display of relevant sites in response to keywords is not enough to establish a risk of confusion on the part of consumers as to the origin of goods or services," said Maduro in the statement. "Internet users are aware that not only the site of the trademark owner will appear as a result of a search in Google's search engine... These users will only make an assessment as to the origin of the goods or services advertised on the basis of the content of the ad and by visiting the advertised sites."

Maduro's opinion doesn't leave Google totally in the clear. Maduro said the company might be liable if found to feature content in AdWords that infringes on a trademark. But even in this case, the trademark owner would have to cite specific instances of damage to their trademarks in order to hold Google accountable.

Trademark issues over AdWords have plagued Google for years, both in the U.S. and especially in Europe where Louis Vuitton and others have taken the company in and out of court. French justice has generally found in favor of the trademark owners, usually ordering Google to pay a fine. But the issue has never been definitively settled.

In response to the latest round of legal squabbles, the French court has asked the European Court of Justice to now settle the issue.

The Advocate General's statement is not binding on the court, but the opinion is strongly considered. The court is now reviewing the case and will render its judgment at a later date.

Google offered an olive branch to rivals of its digital book efforts at a congressional hearing Thursday, but Amazon was having none of it.

David Drummond, Google's chief legal officer, testifies before Congress.

(Credit: Screenshot by Stephen Shankland/CNET)

The move involves a major point of contention in Google's project to bring books to the Internet and in a proposed settlement of class-action suits that author and publisher groups brought against the project. Specifically, Google announced a reseller program that would let competitors get some measure of the rights--and revenue--that Google itself could get through the settlement.

"Any bookseller--Amazon, Barnes & Noble, Microsoft--would be able to sell the books covered by the settlement," said David C. Drummond, Google's chief legal officer. Under the proposed settlement, Google would get 37 percent of revenue from e-books sold through its service, and through the reseller program, the reseller would get "the significant majority" of that 37 percent, Drummond said.

He announced the offer during a House Judiciary Committee hearing on digital books issues raised by Google Books project. If the settlement is approved, Google would get the right to sell not just books for which it had explicit agreements with rights holders, but also for out-of-print books that still are in copyright for which Google doesn't have explicit permission.

That blanket permission has worried some, notably Amazon, which has scanned 3 million books with permission and opposes the settlement. Drummond explicitly said Amazon would be allowed to participate the revenue-sharing program.

Amazon: No thanks
But Amazon indicated it's not interested after Judiciary Committee Chairman John Conyers, a Democrat from Michigan, asked the company's reaction to this "thrilling new piece of information" from Google.

Paul Misener, Amazon's vice president of global policy

(Credit: Screenshot by Stephen Shankland/CNET)

"The Internet has never been about intermediation," said Paul Misener, Amazon's vice president of global policy. "We're happy to work with rights holders without anybody else's help."

The hearing revealed some representatives, including the chairman, to be allies of Google. Also generally speaking in favor of Google's work were Zoe Lofgren and Brad Sherman, both Democrats from California.

"It is a good thing to provide millions of Americans access to published works that otherwise wouldn't be available to them," Conyers said. "A library available to every household with an Internet connection--this could be the greatest innovation in book publishing since the Gutenberg press."

But a high-profile opponent emerged in Marybeth Peters, the register of copyrights at the U.S. Copyright Office.

"By permitting Google to engage in an array of new uses, the settlement would alter the landscape of copyright law," in effect subjecting authors to "compulsory licenses" for their works, Peters said.

"Compulsory licenses are the domain of Congress, not the courts," she said, adding that the settlement could cause diplomatic stress for the United States because foreign authors' books are in U.S. library collections that Google is scanning.

Opting in or out
Google wants to be able to sell electronic books online and has scanned 10 million books since 2004 as part of the program. About 2 million are out of copyright, meaning Google and anyone else may do as they like with them; about 2 million are in copyright and in print, with Google establishing permission from rights holders; and about 6 million are in copyright and out of print. It's this last category that's so contentious--particularly in the case of "orphaned" books, whose rights holders can't be located.

Misener specifically objected to the way in which the class-action suit would give Google the right to sell access to the in-copyright, out-of-print books without obtaining permission first.

Google is the only entity in the world that could approach copyright as an opt-out mechanism," Misener said, meaning that authors and publishers are included in the Google project by default. "Everybody else faces the current legal regime, which is opt-in."

Marybeth Peters, the register of copyrights at the U.S. Copyright Office

(Credit: Screenshot by Stephen Shankland/CNET)

Sharing Misener's concerns was Rep. Hank Johnson, a Democrat from Georgia. "I'm troubled by the exclusive access Google will have to orphaned works. Why should Google be the only entity permitted to sell orphaned works?" he asked. And he believes the case in the courts could edge in on the job of his own branch of government.

Orphaned works rights-holders aren't completely ignored in the proposed settlement, though. It would create a nonprofit organization called the Books Rights Registry that would collect sales revenue--minus Google's cut--and use that money to locate missing rights holders of and compensate them and other rights holders.

Google argues its program will let millions of out-of-print books generate revenue once again, including orphaned works. Reinforcing Google's point, Sherman criticized Amazon for focusing on digitizing bestsellers but not bothering to bring other books to the electronic realm.

Misener stood by Amazon's position, though. "We are not scanning books for which rights holders cannot be found in advance. That's the way the law requires," he said.

Sherman countered by likening the orphan-works situation to that of unclaimed property. "We want unused property and unclaimed property to be made use of, and we want the ultimate owner to be compensated when found," he said. "To say all that knowledge should be locked up and unavailable to humankind doesn't seem to be in the interest of knowledge."

Congress or the courts?
Conyers indicated he doesn't see the orphaned-works issue as an issue that can't be resolved.

House Judiciary Committee Chairman John Conyers

(Credit: Screenshot by Stephen Shankland/CNET)

"My primary concern is because Google reached this settlement, they now have exclusive access to orphaned works," Conyer said. "This can be remedied by legislation."

Such legislation hasn't been easy to come by, though. The House and Senate have worked on it in recent years but have yet to pass any new law. Google's proposed settlement raises the issue that for one company at least, the orphan-works issue could be settled in the judicial branch of government rather than the legislative branch.

"The best protection of the prerogatives of the legislative branch is for us to legislate. Since we have haven't done very effectively the legislation on the orphaned works, it's hard for me to condemn the courts to have a case before it that determines what can be done and can't be done with orphaned works," said Rep. Mel Watt, a Democrat from North Carolina.

Johnson disagreed. "The settlement is coming very close to whittling away the powers of the U.S. Congress. The treatment of orphaned rights holders is a matter that should be determined by Congress," he said.

Things get even more complicated, too: the executive branch, in the form of the Justice Department, is investigating the proposed Google Books settlement.

For its part, Google has no objection to legislation--even if it grants competitors rights to the same books the proposed settlement would give it access to. "We support Congress going in and legislating around that," Drummond said.

Updated at 11:15 a.m. PDT with further detail from the hearing.

Faced with issues ranging from online ads to copyright laws, Google spent $950,000 lobbying Washington in the second quarter, according to a federal government database.

The amount compares with the $880,000 that Google spent on lobbying in the first quarter--and the $2.84 million it spent for all of 2008.

Among the issues that Google lobbied on: intellectual property, copyright related to the Google Book Search settlement, and privacy and competition surrounding online advertising.

Google has been under fire from the Justice Department over the company's settlement of a lawsuit with book publishers on digital rights issues.

Washington is also thinking of limiting the type of information that online advertisers can collect from consumers, according to a Wall Street Journal blog on Google's lobbying efforts. That's another hot button topic for Google, which depends on Internet ads for 97 percent of its sales.

"There is a growing number of issues being debated in Washington affecting the Internet and our users, and we feel it is important to be involved in those debates," said Adam Kovacevich, a Google spokesman told the Journal.

Although Google has upped its lobbying budget, other high-tech giants still pay more, according to the federal database: Microsoft spent $1.89 million to lobby in the second quarter, IBM paid $1.34 million, AT&T spent $3.06 million, and Verizon Communications and Verizon Wireless combined shelled out $4.37 million.

The government's searchable database of lobbying activity is available on the U.S. Senate Web site.

(via Wall Street Journal)

A court in the United Kingdom has ruled Google isn't on the hook for defamatory information in its search results, saying the company facilitates access to the information but isn't a direct publisher.

The High Court judge, David Eady, offered his conclusion Thursday in a case pitting Metropolitan International Schools, a distance learning company, against Google UK and its U.S. headquarters. The school had argued that a posting on Digital Trends forums calling one class a "scam" was defamatory, and that Google was liable too since a snippet from the forum appeared in its search results.

However, the judge found Google--the third defendant in the case--is merely a conduit to the information, not a publisher in its own right.

"When a snippet is thrown up on the user's screen in response to his search, it points him in the direction of an entry somewhere on the Web that corresponds, to a greater or lesser extent, to the search terms he has typed in. It is for him to access or not, as he chooses. It is fundamentally important to have in mind that the Third Defendant has no role to play in formulating the search terms...It has not authorised or caused the snippet to appear on the user's screen in any meaningful sense. It has merely, by the provision of its search service, played the role of a facilitator.

In addition, the judge drew a physical-world analogy with somebody compiling a card catalog.

If a scholar wishes to check for references to his research topic, he may well consult the library catalogue. On doing so, he may find that there are some potentially relevant books in one of the bays and make his way there to see whether he can make use of the content. It is hardly realistic to attribute responsibility for the content of those books to the compiler(s) of the catalogue.

Legal liability for search results is a complicated area. Search results can reveal unflattering or controversial descriptions of people, can make it difficult for companies to control use of their trademarks, and otherwise reveal information that individuals or organizations would prefer not be discovered. However, in cases where search results are modified, such as in China, search engines face accusations that they're screening out important information.

Update 4:52 p.m. PDT: Google was happy with the ruling. The company said in a statement:

We are pleased with this result, which reinforces the principle that search engines aren't responsible for content that is published on third party websites. Mr Justice Eady made clear that if someone feels they have been defamed by material on a Web site then they should address their complaint to the person who actually wrote and published the material, and not a search engine, which simply provides a searchable index of content on the Internet.

Via the Guardian.

European Union regulators want publishers and authors to weigh in on copyright issues with Google's book scanning and book search project, according to the Associated Press.

European Commission officials will meet with copyright holders on September 7 to discuss the search giant's $125 million proposed settlement with U.S. publishers and authors granting Google the right to digitize and publish books that are out of print but still protected by copyright law. The court overseeing the settlement has given authors a September 4 deadline to opt out individually if they don't not wish to participate. Google has negotiated many deals with some publishers for current works and is also digitizing public-domain works.

Critics complain that the deal, which is scheduled to be implemented in October, would effectively give Google a monopoly over books that are in copyright but out of print. Google argues that the agreement will make millions of books hidden on library shelves more accessible and give publishers and authors a new opportunity to profit from them.

Earlier this month, the U.S. Department of Justice said it was launching a formal investigation into the proposed settlement.

A Google spokesperson told CNET News that the company will be at the EC meeting.

"What's currently planned is a fact-finding exercise by the Commission--not an investigation--and we're looking forward to taking part," the spokesperson said in an e-mail. "We agree with European Commissioner, Viviane Reding, when she said, "We should create a modern set of European rules that encourage the digitization of books."

Update 4:50 p.m. PDT: The Wall Street Journal reported that the U.S. House of Representatives' Judiciary Committee also is considering a look at the matter, citing unknown people with whom the committee discussed its plans and a Google spokesman quoted as saying, "there's interest in having a hearing to explore the settlement."

Google has partnered with the New America Foundation to create a community feedback forum for ideas on how to improve broadband in the U.S. Users can submit their ideas, which are voted on by others using Google Moderator's yay or nay system.

The forum will be open for the next two weeks, after which Google is going to take some of the top-voted ideas to its proposal, which is being submitted to the Federal Communications Commission. The FCC will then take some or all of those ideas to congress early next year as part of the economic stimulus plan.

So far, there are a little over 70 ideas from some 270 registered users. Using the service requires signing up with a Google account, however any name can be provided when creating ideas.

Google is using its Moderator product to collect ideas on how to fix broadband.

(Credit: CNET)