Randall asks about antitrust issues, and both he and David think there aren’t many, at least in Google’s core search business. I tend to agree, for reasons they’ve laid out. Compared with the lock-in of using Windows and the network effects of a common set of operating system interfaces, web search is a wide open world. Anyone who comes along and offers better search is in a position to grab the lion’s share of the market, the way that Google itself grabbed it in the beginning of the decade. (For the record, I don’t think Microsoft’s deals with Dell and Verizon Wireless are a sign that Microsoft is competing effectively in its search offerings; they’re a sign that Microsoft has enormous piles of money to throw away on bad business decisions.)

The DoJ scrutiny of the Google-Yahoo deal was similarly off-base. The usual antitrust fear is that sellers will collude and raise prices. But the instant a web search company stops providing free search, it’s dead. Faced with this fact of the search marketplace, opponents of the deal argued that the companies would raise their prices to advertisers. That would be plausible, except that Google’s ad-pricing algorithm is based on an auction to potential advertisers; their competition with each other sets the price. And, of course, from an advertiser’s perspective, search ads are just one piece of the online advertising market; if the prices for search ads go up, advertisers will just find another way to annoy web users. There is at least one place where Google needs a good, careful antitrust review, though: Google Book Search

Planet Google has a nice chapter on how Google decided to start digitizing every book it could get its hands on, and how it ticked off authors and publishers in the process. Their lawsuits were pending when Planet Google went to press, but this October, the parties announced a proposed settlement. Not only will Google be free to continue digitizing and indexing books (the issue actually at stake in the lawsuit), it’ll also get the green light to sell individual e-books and subscription access to its entire collection. The majority of the revenue will go back to copyright owners.

The antitrust danger here is that the settlement puts Google in a highly privileged position for book search and book sales. Do you want to sell e-books of scanned out-of-print books the way Google will? Good luck with that; I hope you’ve put aside a lot of money for lawyers. The authors and publishers settled voluntarily with Google, but there’s no guarantee they’ll offer similar terms, or any terms at all, to anyone else. Google also gets some excellent deals with the new Book Rights Registry the settlement sets up to process payments to copyright owners. The Registry is empowered to negotiate on behalf of all authors and publishers, and it could unilaterally decide only to talk to Google.

The settlement hasn’t been approved by the court yet, so some of the harms are still speculative. But you don’t need to speculate very hard to come up with some. Google could set its e-book prices to undercut the entire used book market and drive most used book stores out of business. Google could offer low rates on subscription access until cash-strapped libraries discarded their (expensive-to-store) physical copies of books and then jack up the price once the libraries were dependent on it. It could use its unmatched collection of titles to offer bundles and tie-ins that no competitor could match.

I’m not saying that the book search project is a bad thing; in fact, it’s one of the best things to happen to publishing in a long time. Authors, publishers, and readers will all win. My point is just that the way the settlement is currently set up will give Google and the new Book Rights Registry far more power than accountability. The settlement needs more public attention than it’s been getting. Maybe we can convince Randall there’s a killer article to be written about it?