A judge’s rejection of Google Inc. (GOOG)’s bid to create the world’s biggest digital library will reinforce demands by company detractors for a federal antitrust investigation into its business practices, legal analysts said.
Google’s opponents will cite the ruling to support claims the company is seeking to control the Internet search market, Herbert Hovenkamp, a professor at the University of Iowa College of Law in Iowa City, said in an interview. The decision “will strengthen the hand of those who want to do an antitrust investigation.”
U.S. Circuit Judge Denny Chin on March 22 struck down a $125 million settlement between Google and publishers and authors to create a digital library, saying the deal would be unfair to authors. The Mountain View, California-based company, owner of the world’s most popular search engine, also has been accused of reducing competition in the search industry.
Microsoft Corp. (MSFT) and other Google rivals are members of FairSearch.org, a group that opposes the company’s planned acquisition of Cambridge, Massachusetts-based ITA Software Inc., which provides online data for airline ticket prices.
Microsoft’s Ciao from Bing, French legal search engine Ejustice.fr and Foundem, a U.K. price-comparison website, have filed complaints with the European Union. The EU is investigating whether Google is unfairly ranking its services higher than rivals in search results.
Google has defended its business strategy and accused Redmond, Washington-based Microsoft of a campaign to undermine the Internet search company.
Jonathan Jacobson, an antitrust lawyer working for Google, said that Chin’s ruling would hurt computer users.
“It is going to deprive consumers of the huge benefits that the settlement would have generated,” Jacobson, a New York-based lawyer at Wilson Sonsini Goodrich & Rosati, said on Bloomberg Television. “If Microsoft is out there trying to degrade the quality of Google search, do consumers benefit from that?” he said. “No, they don’t.”
Jacobson declined to comment on how Google will proceed legally.
Google’s focus should be on regulators, not rivals, said Charles “Rick” Rule, a Washington-based attorney who represents Microsoft, in a statement.
“Google’s antitrust problems are with the federal courts, the U.S. Department of Justice, state attorneys general, and the European Commission, all of whom have raised concerns about Google’s monopolistic conduct,” said Rule, head of the antitrust group at Cadwalader, Wickersham & Taft LLP.
In reaching its now-voided settlement with publishers and authors, Google disguised its real purpose for scanning rare and out-of-print books, said Gary Reback, co-founder of the Open Book Alliance. The group includes libraries, authors and publishers as well as Microsoft, Amazon.com Inc. and Yahoo! Inc.
Google’s intent was to create an unfair advantage by scanning books without getting copyright permission, said Reback, an antitrust attorney for Menlo Park, California-based Carr & Ferrell LLP whose clients include Foundem. The scans then could be used to tweak the mathematical formulas that enable rapid retrieval of information about rare books, he said.
“Google puts itself in a position to answer those rare queries in a way no other competitor could,” Reback said.
Hovenkamp said that doesn’t necessarily suggest anticompetitive behavior. Google is “putting together a product so attractive for customers that customers want to go with it,” he said.
‘Not a Court Case’
The books decision also focus on issues, such as copyright and class-action law, that don’t apply to a broader anticompetitive argument, said Adam Kovacevich, a Google spokesman, in an interview.
The ruling likely won’t be a foundation for a broader case against Google, said James Grimmelmann, an associate professor of New York Law School and a critic of the Google books deal.
“This will be useful to Google’s detractors in building a case in the court of public opinion but not a court case,” he said. Legal analysts noted that the judge’s discussion of antitrust consumed only three pages of a 46-page opinion.
“It was a very minor point,” said Scott Gant, a partner at Boies, Schiller & Flexner in Washington who filed the first major objection to the Google Books deal. “This isn’t a kind of sea change” in federal court views of Google.
Still, the decision did show “Google can be defeated,” he said.
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