Google won more power in its marketplace with a U.S. Supreme Court decision on Monday that allows it to continue with its Google Books digital library. While a section of authors complain that Google Books infringes upon their copyrights, many believe it is in the public interest to open up access to books of all types – new, old and out of print – for search purposes.

“It is a huge win for Google and its business model, but not necessarily a huge blow to the authors,” said University of Pennsylvania Law School professor R. Polk Wagner, whose specialties include intellectual property. “Google’s business model is to have as much information available at your fingertips as possible because that makes all of Google’s services more and more valuable.”

However, the court decision is “a huge blow for any company that might want to rival Google” because it upholds Google’s ability to continue to digitize the world’s in-print and out-of-print books, said Wagner. All said, it ultimately benefits society at large by spreading knowledge and information, he added.

Wagner explained how the latest court decision benefits Google’s business strategy, and how it is also worrisome on grounds of privacy and competition. He spoke on the Knowledge at Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

Google has been scanning books at libraries around the world since 2004 to offer users the ability to search through those books for free. That rankled the Authors Guild, a New York City-based advocacy group for writers, which filed a lawsuit against Google in 2005. The case eventually reached the U.S. Court of Appeals for the 2nd Circuit in New York in October 2015, which ruled in favor of Google. Making digital copies of those books falls within the ambit of the Fair Use doctrine in copyright law that permits use of copyrighted material without permission in select cases, it said. The Authors Guild wanted a review of that ruling, which the Supreme Court rejected on Monday, effectively upholding the lower court’s decision.

Strategic Fit

Wagner says Google carefully planned its foray into the digital library business. More than a dozen years ago, it began negotiating deals with top university libraries around the world to bring in teams and equipment, and make digital copies of their books as fast as they could. “It is an unbelievably large task that I am sure cost Google millions and millions of dollars,” he said. “As is very typical of Google, they scan first and ask questions later.”

“As is very typical of Google, they scan first and ask questions later.” –R. Polk Wagner

Now emboldened by the Supreme Court decision, Wagner expected Google to get “even more aggressive” with its digital library of books. “The basic business model of Google is to get as much information online as possible,” he said. “Digitizing all the libraries of the world is a major piece of that long-term strategy.”

Although a free search of books benefits the public, Wagner warned against making such assumptions with Google’s strategy. “One should be very clear-eyed that Google is not doing this out of the goodness of its own heart. There is clearly a strategic benefit to Google vis-a-vis competitors,” he said. The overarching view is that “the more valuable the Internet is and the more valuable electronic archives are, the better Google [will] do as a company.”

While any other company could try and replicate Google’s work with its digital library and become a competitor, Wagner did not expect that because of the huge costs and complexities involved. Therefore, for Google, “this is effectively a monopoly on this cache of information that is now available for free and without monetization at this point,” he said. “On the other hand, there is only one company now that controls how this is going to be used and controls whether authors get paid for it or not.”

Implications for Authors

Wagner listed three ways the ruling could upset authors. One, it could potentially cause them financial pain. The Authors Guild has said that it is “actively working with other organizations to create market-based solutions for collective licensing of books from authors.” The Guild could go to a Yahoo or Bing or another search engine and have them create the digital repository in exchange for money which would be distributed to authors, said Wagner.

“One should be very clear-eyed that Google is not doing this out of the goodness of its own heart. There is clearly a strategic benefit to Google vis-a-vis competitors.” –R. Polk Wagner

Secondly, authors may get a sense of disquiet with Google getting a head start in digitizing books and providing a search service. That is especially so if they look at how iTunes and Netflix disrupted the music industry and the movie and TV industries, respectively, said Wagner. “Early movers who get a large market position are difficult to dislodge,” he added. Third, the authors wanted to uphold a principle that copying somebody’s book requires their permission, even if it is in the public interest, he added.

The issue that worries authors the most is that in order to allow searching, Google needs to copy entire books, Wagner noted. Although Google does not display entire books to the public, they live on Google’s servers. “The authors are concerned that a digital copy is out of control of the authors,” said Wagner. “Even though Google is using it in a fairly circumscribed way, they don’t know what could happen.” He noted that the Authors Guild in its court brief raised fears that hackers could get into Google’s archives and download entire books.

The author community was disappointed with the decision. “Today authors suffered a colossal loss,” said Authors Guild president Roxana Robinson in a statement on the day the Supreme Court announced its decision. “The denial of review is further proof that we’re witnessing a vast redistribution of wealth from the creative sector to the tech sector, not only with books, but across the spectrum of the arts.”

Copyright Alliance CEO Keith Kupferschmid said in a statement, “In declining to take the case, the Supreme Court let stand a Second Circuit decision that dramatically expands the boundaries of the fair use doctrine’s transformative use test, which affects creators and copyright owners of all types.”

Google, of course, read the decision differently. “We are grateful that the court has agreed to uphold the decision of the Second Circuit which concluded that Google Books is transformative and consistent with copyright law,” it said in a statement. “The product (Google Books) acts like a card catalog for the digital age by giving people a new way to find and buy books while at the same time advancing the interests of authors.”

“We should worry about the power of Google more generally over our digital lives.” –R. Polk Wagner

Google has made it clear that authors who don’t want their books included in its repository could opt out. If they don’t expressly do so, their books will get included by default. Wagner noted that Google has also said that it is not feasible for it to seek permission for each book from authors, especially when many are not traceable, or have perhaps died and their estates are not reachable.

What’s Fair Use and What’s Not

Wagner said the Fair Use doctrine has always been controversial because it is not clear cut in how it applies. Courts rule on the applicability of the doctrine on a case-by-case basis, applying a four-factor test including the nature and character of the use and how much of that work affects the market for the works in question, he explained.

Somebody downloading copyrighted digital music might not fall within the ambit of fair use, but it might be deemed fair use if a professor plays a section of that music in a classroom to explain copyright law, said Wagner. “The difference between those two cases is clear in terms of which one would be fair use, but there are so many gray areas in the middle that are much more difficult to understand,” he said.

Broader Concerns

Wagner had his own concerns arising out of the court decision, and they were not about copyright law but about how good it was for the public. “We should worry about the power of Google more generally over our digital lives,” he said.

Wagner explained that if he were to search for a particular phrase on Google Books in his office, Google would have profiled him and tracked him to find out what he did next – did he go out and buy the book, or take some other action? “These are all incredibly valuable pieces of information about consumers, about consumer habits [and] about public preferences that Google is everyday amassing more and more and more,” he noted.

“Is Google getting so powerful in the area of Internet search that we have lost control and lost competitiveness?” Wagner asked. “[Is it] ultimately going to lead us down the path of all the things that a lack of competition brings you – less innovation, more costs, more intrusiveness, and all of those things?”