GBS: Mark Lemley’s Antitrust Analysis

Mark Lemley’s An Antitrust Assessment of the Google Book Search Settlement has been online at SSRN for a month and no one told me? Come on, folks, step it up!

There’s not much new in this short piece. I thought there were three interesting passages. First, on market definition:

First, it is strange to talk about a “monopoly” over an ill-defined set of books. Nobody knows which books are actually orphaned. Furthermore, the term “monopoly” is usually applied with respect to an economic market for a good and its substitutes. Orphan works seem unlikely to constitute a separate market, because many if not all will contain comparable content to non-orphaned books.

That sounds right; orphan works, as such, are probably not a distinct market. Their significance in the more general market(s) for books is open to empirical debate, of course.

Second, on legal barriers:

A more interesting argument is that no one can duplicate Google’s effort because anyone who did so would face a lawsuit similar to the one filed against Google. Even assuming that this is the case, it is not clear that the fact that Yahoo! or Microsoft would have to face the same risk Google did should change the analysis. Much of the criticism of the Google Book Search settlement seems to stem from a belief that Google’s use of the books was a fair use and so not an act of copyright infringement. For what it’s worth, I agree. There is nothing to prevent Yahoo! or Microsoft from litigating the same case to judgment, winning, and then being able to digitize the works and show snippets without paying the price Google has paid. Nothing would prevent them from attempting to negotiate the same or similar terms in a settlement. Of course, doing so is risky, because the statutory damages rules (mistakenly, in my view) threaten not just compensation but dire punishment if the defendant gets it wrong. But Google faced the same risk; it is more than a little odd to say that Google violates the antitrust laws because it has a monopoly that arises solely from the fact that it is more willing to take chances than its competitors.

This mischaracterizes the situation. If Google obtains a monopoly, it will not be solely because it was willing to take more chances than its competitors. Google has shown boldness in scanning books, asserting fair use in indexes and snippets, and negotiating for a full-access settlement. But the final, essential ingredient will have been the use of a class action lawsuit blessed by a court. All the boldness in the world can’t get Google to the Institutional Subscription without a judge’s signature on an order compromising away the rights of copyright owners. It’s an exercise in chutzpah to claim that Google deserves unprecedented access to books because of the risks it took in demanding unprecedented access to books.

The objection, then, must be not that Google shouldn’t be allowed to provide a valuable new service, but that others should be able to provide it too. Fair enough. But that’s hardly a reason to object to the settlement.

My problem is not with the settlement; it’s with certain terms in the settlement. The exclusivity of the settlement’s authorizations is not an essential feature; if the parties were motivated to solve the antitrust issues, they could fix the exclusivity problems. There’s a reason our amicus brief is neither in support of nor opposed to the settlement. As I’ve said from the start, I come to fix the settlement, not to bury it.