June 10 (Bloomberg) -- The U.S. Justice Department has asked Google Inc. and publishers for information about the settlement of a book-scanning dispute, signaling that a federal probe is under way.

Google has received a formal inquiry from the Justice Department, said Adam Kovacevich, a spokesman for the company. The Authors Guild received a civil investigative demand last week, said Paul Aiken, executive director of the New York-based group, which was part of the settlement.

Google, which is creating an online book database by scanning millions of titles, reached a $125 million deal with publishers last year to settle copyright issues. The agreement could make Google the main online source for millions of out-of- print books, raising antitrust concerns.

Hachette Book Group, a publishing company in New York, also received a formal request for information from the Justice Department, said Sophie Cottrell, a spokeswoman. Gina Talamona, a spokeswoman for the Justice Department, declined to comment on the inquiries.

The agency and several state attorneys general have contacted Google to learn about the effect of the settlement, said Gabriel Stricker, a company spokesman.

“We are happy to answer their questions,” Stricker said. Google’s agreement with publishers isn’t exclusive, he said, meaning other companies are free to strike their own deals.

Years of Fighting

Google, based in Mountain View, California, fell $3.02 to $432.60 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have climbed 41 percent this year.

The settlement was designed to end years of hostility between Google and publishers. The company was sued in 2005 by the Authors Guild, Pearson Plc’s Penguin unit, McGraw-Hill Cos., John Wiley & Sons Inc. and CBS Corp.’s Simon & Schuster. They claimed the digitizing process infringed their copyrights.

Google, which began scanning books in 2004, uses volumes from Harvard University, the New York Public Library and other sources. The project lets users search through books, bringing up pages or excerpts that contain sought-for terms.

Google and publishers plan to use $34.5 million of the settlement fund to create a registry program to compensate rights holders, according to court papers. An additional $45 million will be used to compensate authors whose works have already been scanned without permission, the parties said.

The Wall Street Journal reported yesterday that the Justice Department had sent formal requests for information to Google and publishers about the deal.

To contact the reporters on this story: Brian Womack in San Francisco at Bwomack1@bloomberg.net; James Rowley in Washington at jarowley@bloomberg.net

Last Updated: June 10, 2009 18:05 EDT