DOJ opens formal investigation into Google Books settlement

Updated 2:42 p.m. PDT with background information on the settlement.

The U.S. Department of Justice confirmed Thursday that is has opened a formal investigation into the settlement between Google and book publishers over the digital publishing rights to certain books, citing antitrust concerns.

Such an investigation had been previously reported, and Google had confirmed that it had received requests from the government for information. But Judge Denny Chin, who is overseeing issues surrounding the settlement until it is implemented in October, received formal notice of an investigation Thursday from the DOJ and released the letter as part of the court docket concerning the case in the U.S. District Court for the Southern District of New York.

"The Antitrust Division is investigating the possibility of anticompetitive practices involving digital book intellectual property rights and distribution," said Gina Talamona, a DOJ representative. She declined to elaborate beyond that statement and the letter sent Thursday to Judge Chin.

Google issued a statement: "The Department of Justice and several state attorneys general have contacted us to learn more about the impact of the settlement, and we are happy to answer their questions. It's important to note that this agreement is non-exclusive and if approved by the court, stands to expand access to millions of books in the U.S."

Last October, Google settled a lawsuit filed by several publishing groups over its plan to digitize books through Google Books for $125 million. The settlement gave Google the right to digitize and publish books that are out of print but still protected by copyright law, forcing authors to opt out individually if they did not wish to participate. Google has negotiated deals with some publishers for current works, and is also digitizing public-domain works.

The settlement has drawn heated criticism from those who think Google was effectively handed a monopoly over these copyright-yet-out-of-print works, since anyone else who wished to publish those books would have to individually negotiate with their authors, many of whom can not be located very easily. Earlier this year Judge Chin extended the deadline for authors to decide whether they wish to participate in the settlement from May to September, with a final hearing scheduled to take place in October.

Google argues that any potential competitor who also wished to scan books could negotiate a deal with the Books Rights Registry, a nonprofit group set up as part of the settlement to represent the interests of authors. Some think that as a practical matter, however, Google's lead in this area is so beyond the reach of competitors as to discourage efforts to even try, and worry about the concentration of so much information in the hands of one company.

It has been an interesting year for Google and the federal government. After Google executives, including CEO Eric Schmidt, publicly campaigned for President Obama last year, his administration has repaid the favor by taking a very close look at Google, beyond the book search settlement. The DOJ is reportedly looking into the hiring practices of several Silicon Valley companies, including Google, and the Federal Trade Commission has wondered if Schmidt's participation on Apple's board of directors is a conflict of interest given his participation on Google's board.

Google has shrugged off the concerns, noting that any large company should expect scrutiny from the federal government. Still, Google executives have embarked on a charm offensive of late, making the argument that Google really isn't that dominant a company and reminding everyone that the competition "is just a click away."

The letter from the DOJ is reproduced below: