Google Books and the Essential Facilities Doctrine

Google Books is an amazing service. Many others have raved about it, and many others have analyzed the settlement agreement between Google and the The Authors Guild and the Association of American Publishers. For very insightful analyses, see various posts here (a, b, c, d, e) and here, here, here, and here. There are many, many others. I’d like to take a slightly different angle and ask a few tentative questions.

Query: Does it make sense to conceptualize the scanned books database that Google has created and is continuing to build as an essential facility? Suppose Yahoo or some other potential competitor that wanted to compete with Google in indexing and searching the books (and selling ads and complementary services) demanded access and Google refused. Would such a refusal / denial give rise to a plausible antitrust claim? Should it? If so, what remedy? I raise these questions to provoke consideration of whether we might rely comfortably on antitrust law and adjudication in the courts to sort out any access concerns we might have. Based on the arguments in my recent article with Spencer Waller in the Antitrust Law Journal, I think a plausible essential facilities claim could be made, although it would probably not go anywhere in the United States given the current state of antitrust law. In our article, we explain that there are both supply and demand side arguments to consider. Boiled down quite a bit, the supply side argument would be that Google’s scanned books database is a facility that cannot be reasonably duplicated by existing or potential competitors [some tried, but gave up; it is cost-prohibitive; there are too steep barriers to entry; etc.], Google is a monopolist in the “comprehensive scanned books database market,” and perhaps society is better off with a single provider — i.e., it’s a natural monopoly. And also boiled down, the demand side argument would be that the comprehensive scanned books database is infrastructural in a way that calls for nondiscriminatory access because it facilitates an incredibly wide variety of activities (and markets) that generate public and nonmarket goods (as well as commercial goods). (For details on the arguments, see the article.)

What remedy? Perhaps an injunction requiring nondiscriminatory access would be sufficient; it would implement a nondiscriminatory access rule for competitors like Yahoo or anyone else seeking to piggyback on the scanned books database and compete in the book search market. Those granted access would not get free access and might be required to pay some fee set to cover some of the fixed costs associated with building and maintaining the database; and it would probably be necessary to have those seeking access “qualified” by some third party to ensure they take adequate precautions to keep the database secure. Obviously, the details require some working out. Moreover, the need for regulatory oversight — nondiscriminatory access, reasonable cost-based fees, security precautions — for various actors might suggest that a regulatory solution might be preferable to court supervision.

I wonder whether this is a good test case for the essential facilities (as modified by infrastructure theory) doctrine. There are many complications that I have not had a chance to work through yet. There may be various antitrust wrinkles to think about, and one can imagine a series of defensive arguments made by Google–e.g., it has no power over price and charges nothing in the book search market; it gives its product away to consumers; it seems to encourage production of various public and nonmarket goods.

Reactions? Suggestions?

2 thoughts on “Google Books and the Essential Facilities Doctrine

  1. Brett,

    An intriguing post, and although notably IANAL, it is an interesting way of approaching the near- or quasi- monopoly position that GBS presents in the back, mid, and front list materials, combined with the public domain and orphans. That is a compilation profoundly unlikely to be replicated by any other actor.

    I think though that one of the most significant monopoly characteristics of GBS is the monopoly that befalls to Google over the advertising revenue of the integration of GBS digital material with other information sources (that Google has aggregated), combined with user intentionality data. Even broader than thinking of simply the content itself, it is the capacity to generate unique-to-Google advertising based revenue that is truly, I think, an enlargement of share in the natural monopoly market of online advertising – this is the market that the DoJ singled out for attention at the time of the vacating of the Google-Yahoo search deal.

    As I wrote in my blogpost, “Class Action Monopoly,” http://snurl.com/c04l0,

    “For Google, that value is derived not from the commerce of books, but from mining this vast collection of information, unearthing its store of recorded knowledge and mapping its unseen conceptual relationships, and then integrating that knowledge across a wide range of information- based products, ultimately supporting advertising revenue. That revenue would be effectively forever prohibited to other parties by the approval of this agreement. From a commercial perspective, these data are unique, held only in Google’s armory.”

  2. Brett,

    An intriguing post, and although notably IANAL, it is an interesting way of approaching the near- or quasi- monopoly position that GBS presents in the back, mid, and front list materials, combined with the public domain and orphans. That is a compilation profoundly unlikely to be replicated by any other actor.

    I think though that one of the most significant monopoly characteristics of GBS is the monopoly that befalls to Google over the advertising revenue of the integration of GBS digital material with other information sources (that Google has aggregated), combined with user intentionality data. Even broader than simply the content itself, it is the capacity to generate unique-to-Google advertising based revenue that is truly, I think, an enlargement of share in the natural monopoly market of online advertising – this is the market that the DoJ singled out for attention at the time of the vacating of the Google-Yahoo search deal.

    As I wrote in my blogpost, “Class Action Monopoly,” http://snurl.com/c04l0,

    “For Google, that value is derived not from the commerce of books, but from mining this vast collection of information, unearthing its store of recorded knowledge and mapping its unseen conceptual relationships, and then integrating that knowledge across a wide range of information- based products, ultimately supporting advertising revenue. That revenue would be effectively forever prohibited to other parties by the approval of this agreement. “

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