Reprinted with permission.
This article fi rst appeared in E-Commerce Times 04/13/11.
Google’s influence is pervasive, and the outcomes of the many legal actions pending against the company will reverberate in many quarters. Given Google’s size and strength, the resolution of these challenges will affect social media, search engines and the entire digital world.
Courts and regulators have recently made life more complicated for Google (Nasdaq: GOOG), impacting millions of Google users worldwide. Notwithstanding Google’s US$29 billion revenue performance in 2010, new challenges continue to plague the company.
Judge Rejects Google’s Book Settlement
As you may know, Google planned to digitize millions of books. In 2005, a copyright infringement class action was filed, and a settlement was reached recently. After receiving an avalanche of comments from around the world regarding the Google Amended Settlement Agreement (ASA) in the class action, U.S. Circuit Judge Denny Chin rejected the ASA for many reasons.
The Judge concluded in his 48-page opinion that the ASA was not fair, adequate and reasonable, and stated that while “the digitization of books and the creation of a universal digital library would benefit many, the ASA would simply go too far” since this ASA would “implement a forward-looking business arrangement that would grant Google significant rights to exploit entire books, without permission of the copyright owners.”
He went on to say: “Indeed, the ASA would give Google a significant advantage over competitors, rewarding it for engaging in wholesale copying of copyrighted works without permission, while releasing claims well beyond those presented in the case.”
Since 2004, Google has scanned more than 12 million books from several major research libraries, including Austrian National Library, Columbia University, Cornell University, Harvard University, the New York Public Library, Oxford University, Princeton University, University of California, University Complutense of Madrid, University of Michigan, University of Texas at Austin, University of Virginia, and University of Wisconsin-Madison.
The lead plaintiff in the class action is the Authors Guild, and notices of the lawsuit were sent (in 36 languages) to a class of potential plaintiffs including more than 1.26 million copyright owners and worldwide associations of publishers and authors. Obviously, the class of plaintiffs in this case is a complex group with differing interests in Google’s use of the books and snippets from books.
The Library Project’s aim is simple: “Make it easier for people to find relevant books – specifically, books they wouldn’t find any other way, such as those that are out of print – while carefully respecting authors’ and publishers’ copyrights. Our ultimate goal is to work with publishers and libraries to create a comprehensive, searchable, virtual card catalog of all books in all languages that helps users discover new books and publishers discover new readers.”
As noted above, Judge Chin’s Order recognized that Google’s project used many copyrighted works without authority, and he sent the dispute back to the parties to try to reconcile a new settlement or set the dispute for a trial. But the Judge did state that establishing new digital uses of copyrighted materials should be decided by U.S. Congress and foreign governments rather than by Google in a class action settlement.
On another subject, Google’s rollout of Buzz in 2010 was badly received by the user community, but that was the least of its troubles. The Federal Trade Commission (FTC) filed a Complaint for Google’s violation of its own Privacy Policies. In its settlement, the FTC noted that “Google launched its Buzz social network through its Gmail Web-based email product. Although Google led Gmail users to believe that they could choose whether or not they wanted to join the network, the options for declining or leaving the social network were ineffective.
“For users who joined the Buzz network, the controls for limiting the sharing of their personal information were confusing and difficult to find,” the agency said.
The FTC Complaint alleged that Buzz violated U.S. privacy laws, and also violated the U.S.-EU Safe Harbor Framework to allow personal data to be lawfully transferred from the EU to the U.S. Ultimately, Google settled this dispute with the FTC, and the FTC announced that “the proposed settlement bars the company from future privacy misrepresentations, requires it to implement a comprehensive privacy program, and calls for regular, independent privacy audits for the next 20 years.”
The FTC settlement with Google sends a huge wake-up message to companies to review their Privacy Policies for violations!
EU Problems for Google
Antitrust allegations “ target=”_blank”>have been filed with the European Commission (EC) by the French company 1plusV, a maker of specialized search engines for such topics as law and music, and parent company of Ejustice.fr, a legal search engine. 1plusV alleges that Google created an illegal tie-in for competing search engines that were required to use Google search technology in order to use Google ads on their sites.
Also, Microsoft (Nasdaq: MSFT) plans to file an antitrust complaint against Google based on the fact that Google apparently has 95 percent of the search market.
Recently, Google settled a dispute with the French Competition Authority over rejecting ads; the settlement requires a three-month notification period before rejecting ads going forward. Navx bought ads from Google for its software app designed to help drivers avoid speeding tickets by providing “online maps pinpointing the location of radar and camera systems the authorities use to crack down on speeding on French roads.”
Because radar detectors are illegal in France, Google rejected Navx’s ads, and Navx filed a lawsuit in court for 7 million euros (US$9.7 million) alleging damages. As part of the settlement, Google “pledged to overhaul its rules and procedures for blocking certain advertisers from buying “sponsored links.””
About a year ago, three Google executives were convicted of violating Italian privacy laws for a video posted on Google that showed the bullying of a disabled teenager. There is no question that the video was in poor taste, and Google took the video down within 24 hours of its posting after receiving two complaints.
The conviction of Google’s global privacy counsel, Peter Fleischer, along with two other executives, raises significant issues. A fourth Google executive was acquitted. Google appealed these convictions, which apparently are still pending.
And One More - Texas Attorney General Reviewing Google
A number of allegations that Google manipulates search engine results led to an investigation of possible Texas antitrust violations.
Google responded as to why some websites get higher rankings than others: “The important thing to remember is that we built Google to provide the most useful, relevant search results and ads for users. In other words, our focus is on users, not websites. Given that not every website can be at the top of the results, or even appear on the first page of our results, it’s unsurprising that some less relevant, lower quality websites will be unhappy with their ranking.”
Since search engines do not disclose how they operate, this investigation by the Texas Attorney General AG may result in making public, for the first time, how Google’s search engine actually operates.
Google continues to face numerous challenges to its business model in the U.S. and around the globe, and as it continues to grow, I suggest we will see more of such challenges.
Given Google’s size and strength, the resolution of these challenges will affect social media, search engines and the entire digital world.