Antitrust and the Google Books Settlement

Google Books represents the latest attempt at the centuries-old goal to build a universal library. In 2004, Google started scanning books from libraries around the world. Although it made copyright licensing agreements with some publishers, it did not obtain permission from each rightsholder before scanning, indexing, and displaying portions of books from the stacks of libraries. Unsurprisingly, authors and publishers sued for copyright violations. Google settled the class action lawsuit in a sweeping agreement that has raised suspicion from librarians, users, and the government. In this paper, I analyze the antitrust and competition issues in the original and amended settlement agreements. I find that the simultaneous aspects of agreements and pricing pose serious antitrust problems. The settlement effectively gives Google simultaneous agreements with virtually all the rightsholders to in-copyright American books. The original agreement also would have required Google to set prices for books simultaneously. In a competitive market, both agreements and pricing would occur independently. Under current law, however, no potential competitor can make agreements with the rightsholders to orphan works. The simultaneity, therefore, concentrates pricing power, leading to cartel pricing (a problem under § 1 of the Sherman Act) and monopolization (a § 2 problem).