Tag: google

A Rarity: Newspaper Argues Against Techno-panic, Cites Constitution

Progress & Freedom Foundation president and Cato alumnus Adam Thierer has done yeoman’s work for years pointing out, and arguing against, the phenomenon of techno-panic as it relates to children. That’s not the only area in which techno-panic can tighten its grip on the neck of common sense and the constitution, of course.

But here’s a delight I ran across this morning: the Los Angeles Times arguing against techno-panic despite the use of Web sites to research and case potential burglary victims (by the “bling ring,” soon to be the subject of a major motion picture).

The Times editorializes:

[T]hieves [did not] have to wait for the invention of Google maps to reconnoiter neighborhoods in search of easily accessible homes. That’s worth remembering if, as we fear, some legislator decides that a law should be passed to prevent Internet surfers from looking at houses they easily could scope out from the sidewalk… . . A law against photographing a home or what occurs outside it in plain sight — or disseminating the images to others — would be overreaching, not to mention unconstitutional.

What a delight—a major newspaper arguing to keep a hot issue in perspective and citing the constitution as a limit on government power! Thank you, L.A. Times.

Internet Companies’ Bogus Plea for Regulation

Some of the most prominent Internet companies sent a letter yesterday asking for protection from market forces. Among them: Facebook, Google, Amazon, and Twitter.

A Washington Post story summarizes their concerns: “[W]ithout a strong anti-discrimination policy, companies like theirs may not get a fair shot on the Internet because carriers could decide to block them from ever reaching consumers.”

No ISP could block access to these popular services and survive, of course. What they could do is try to charge the most popular services a higher tariff to get their services through. Thus, weep the helpless, multi-billion-dollar Internet behemoths, we need a “fair shot”!

Plain and simple, these companies want regulation to ensure that ISPs can’t capture a larger share of the profits that the Internet generates. They want it all for themselves. Phrased another way, the goal is to create a subsidy for content creators by blocking ISPs from getting a piece of the action.

It’s all very reminiscent of disputes between coal mines and railroads. The coal mines “produced the coal” and believed that the profitability of the coal-energy ecosystem should accrue only to themselves, with railroads earning the barest minimum. But where is it written that digging coal out of the ground is what creates the value, and getting it where it’s used creates none? Transport may be as valuable as “production” of both commodities and content. The market should decide, not the industry with the best lobbyists.

What happens if ISPs can’t capture the value of providing transport? Of course, less investment flows to transport and we have less of it. Consumers will have to pay more of their dollars out of pocket for broadband, while Facebook’s boy CEO draws an excessive salary from atop a pile of overpriced stock holdings. The irony is thick when opponents of high executive compensation support “net neutrality” regulation.

Another reason why these Internet companies’ concerns are bogus is their size and popularity. They have a direct line to consumers and more than enough capability to convince consumers that any given ISP is wrongly degrading access to their services. As Tim Lee pointed out in his excellent paper, “The Durable Internet,” ownership of a network service does not equate to control. ISPs can be quickly reined in by the public, as has already happened.

A “net neutrality” subsidy for small start-up services is also unnecessary: They have no profits to share with ISPs. What about mid-size services—heading to profitability, but not there yet? Can ISPs choke them off? Absolutely not.

Large, established companies are not known for being ahead of trends, for one thing, and the anti-authoritarian culture of the Internet is the perfect place to play “beleaguered upstart” against the giant, evil ISP. There could be no greater PR gift than for a small service to have access to it degraded by an ISP.

The Internet companies’ plea for regulation is bogus, and these companies are losing their way. The leadership of these companies should fire their government relations staffs, disband their contrived advocacy organization, and get back to innovating and competing.

Washington Legal Foundation Opposes GBS Deal

Via James Grimmelmann, the Washington Legal Foundation, a group known for its defense of property rights, filed an objection to the Google book deal earlier this month focusing on concerns related to those I raised in my posts earlier this week.

WLF points out that the Supreme Court has mandated that plaintiffs seeking to certify a class must make a diligent effort to notify all affected class members. According to the high court’s Shutts decision, this effort must include—at a minimum—sending a letter to every identifiable member of the class. In this case, this would mean sending a letter to every address in the US Copyright Office’s database of authors. WLF questions whether this was done; the foundation reports that it never received notification related to any of the books for which it holds the copyrights.

Now, it might be objected that this process would be prohibitively expensive. But if the class is so large that it’s impractical to notify all of its members, then the class is certainly too large to expect a judge to verify that the interests of all class members is being served by the settlement. If the class is too large to notify, then it’s too large to certify.

WLF also points out that the sprawling and heterogeneous class of plaintiffs makes it unlikely that the plaintiffs’ lawyers can fairly represent all parties who would be bound by the settlement:

For example, only those class members whose works have already been copied by Google are entitled to cash payments under the Settlement Agreement. Thus, the financial interests of those whose works have been copied diverge from the interests of class members whose works have not been copied. The former have an interest in maximizing cash payments, while the latter would prefer to see a smaller portion of the settlement pot allocated to those cash payments and a larger portion allocated to compensation for copying to be performed by Google in the future.

Another distinction among class members involves orphan works – that is, works whose owners are difficult (if not impossible) to ascertain. The owners of orphan works (who may not even know that they hold any ownership interests) have an obvious interest in ensuring that a large portion of settlement funds is dedicated to identifying the ownership of orphan works. On the other hand, the owners of works whose ownership is readily identifiable have an interest in holding down such search costs. If less money is devoted to such search efforts, a correspondingly greater percentage of settlement funds will be available to provide compensation
to them.

The point here isn’t that the amount allocated to orphan works searches is too high (or too low), or that more (or less) should be allocated to pay for previously-scanned books. The point is that a settlement involving millions of plaintiffs will inevitably enrich some plaintiffs at the expense of others. This isn’t a problem that can be solved by changing the details of the settlement. It’s a problem that can only be solved by limiting the scope of the settlement to parties whose interests are actually represented by the plaintiffs’ attorneys.

Google Book Search, Class Actions and the Separation of Powers

In response to yesterday’s post making the case against the Google Book Search Deal, I had spirited conversation with Google policy analyst Derek Slater, who helped me understand Google’s perspective on the case and some of the issues I discussed.

He raised a reasonable objection to my claim that “the settlement would give Google carte blanche to use these orphan works without making a serious effort to contact their owners.” He points out that the settlement stipulates that the Book Rights Registry will make an effort to locate orphan works holders and hold funds in escrow for five years to be paid to any orphan work holders who surface. Describing this as “carte blanche” was probably too strong. I think my basic point—that Google won’t be required to conduct the kind of “diligent search” for rightsholders before using a work—is still valid, but I could have made this point more carefully.

He also quibbled with my contention that the settlement would confer permanent competitive advantages on Google. I think I’m on firmer ground here; although the settlement does extend to Google’s competitors some of the advantages Google itself enjoys, the fact remains that Google would receive broad immunity from copyright lawsuits that would not be extended to Google’s competitors.

Much of our conversation focused on how various parties would be helped or harmed by the settlement. Derek explained that approving the settlement would have some worthwhile consequences: the orphan works problem would be mitigated, libraries and universities would get access to a vast database of books online, and consumers would continue to enjoy access the great product that is Google Book Search. He pointed to various provisions that give third parties access to some of the same licensing opportunities available to Google itself. And he may be right, for example, that most orphan works holders would be made better off by the settlement, since the deal would generate extra income that would be escrowed for them should they subsequently surface.

The problem is that I don’t really know how the various class members might be affected by the settlement. And more importantly, I don’t think the judge does either. The settlement is extremely complex, and it will have too many effects on too many parties for anyone to fully evaluate all of them. In the last month, we’ve seen literally dozens of parties file comments with the courts in support or opposition to the settlement. Indeed, the volume of the comment is so large that I suspect the judge is beginning to feel overwhelmed. And there are doubtless many other parties that would object to the settlement but lack the knowledge or legal savvy to submit comments.

The judicial process works well precisely because it typically makes decisions on a case-by-case basis, fitting the circumstances of each case to an evolving body of precedent. This incremental approach tends to produce a body of law that adapts well to changing circumstances while giving all affected parties the opportunity to have their interests represented. Because different cases are heard by different judges, the mistakes of any one judge won’t unduly influence the direction of the law’s evolution. The class mechanism tends to undermine these beneficial properties of our legal system. Rather than many cases being decided by many judges over a period of years, a class action lawsuit asks a single judge to render justice for thousands of plaintiffs whose individual interests can’t possibly all be represented by the attorneys presenting arguments to the judge. Especially when the proposed class is as large and heterogeneous as the plaintiffs in the Google Book Search case, the class action mechanism demands that the judge to balance the competing interests of thousands of different parties, many of whom have divergent interests. No single person could possibly weigh all the competing arguments in a systematic fashion.

Fortunately, we have an institution with the infrastructure and accountability to deal with precisely this kind of situation: the legislative branch. I think many people find the Google Book Search settlement appealing precisely because it provides an opportunity to bypass the stalemate on Capitol Hill and achieve some de facto changes in the copyright regime that lots of people (including me) regard as desirable. But this perspective misunderstands why the legislative process is so slow and cumbersome. The problem isn’t that Congress is taking a simple problem and making it more complicated than it needs to be. The problem is that orphan works reform is a genuinely difficult problem that will affect the rights of many different people. Achieving consensus is genuinely difficult, we want a slow, sprawling, messy process to make sure everyone gets a fair hearing. The Google Book Search deal wouldn’t really resolve the complex trade-offs Congress is wrestling with, it would simply put the judiciary’s thumb on the scales in favor of those who happen to have the judges ear thanks to the peculiar structure of this lawsuit. This is undoubtedly a faster way to deal with the orphan works problem, but I don’t think it’s a better one.

The Libertarian Case against the Google Book Search Deal

Five years ago, Google began scanning millions of books for inclusion in what eventually became Google Book Search. Google carefully designed the service to stay within the boundaries of copyright’s fair use provisions, at least as Google interpreted them. Still, some authors and publishers objected, and in 2005 they filed a lawsuit accusing Google of copyright infringement. The lawsuit dragged on for more than three years. Finally, in 2008, the parties announced a settlement of the lawsuit. Its text runs for 140 pages, not counting a secret termination clause available only to Google and its adversaries. The deadline for comments on the settlement was earlier this month, and on October 7 a federal judge must decide whether to approve or reject the settlement.

I was (and still am) firmly on Google’s side on the copyright claims at issue in the lawsuit. But the proposed settlement is another matter. The parties like to describe the agreement as a private agreement settling a legal dispute. But I agree with Librarian of Congress Marybeth Peters, who surprised almost everyone on Thursday when, testifying before Congress, she came out swinging against the agreement:

We realized that the settlement was not really a settlement at all, in as much as settlements resolve acts that have happened in the past and were at issue in the underlying infringement suits. Instead, the so-called settlement would create mechanisms by which Google could continue to scan with impunity, well into the future, and to our great surprise, create yet additional commercial products without the prior consent of rights holders. For example, the settlement allows Google to reproduce, display and distribute the books of copyright owners without prior consent, provided Google and the plaintiffs deem the works to be “out-of-print” through a definition negotiated by them for purposes of the settlement documents. Although Google is a commercial entity, acting for a primary purpose of commercial gain, the settlement absolves Google of the need to search for the rights holders or obtain their prior consent and provides a complete release from liability. In contrast to the scanning and snippets originally at issue, none of these new acts could be reasonably alleged to be fair use.

In the view of the Copyright Office, the settlement proposed by the parties would encroach on responsibility for copyright policy that traditionally has been the domain of Congress. The settlement is not merely a compromise of existing claims, or an agreement to compensate past copying and snippet display. Rather, it could affect the exclusive rights of millions of copyright owners, in the United States and abroad, with respect to their abilities to control new products and new markets, for years and years to come. We are greatly concerned by the parties’ end run around legislative process and prerogatives, and we submit that this Committee should be equally concerned.

The fundamental problem with the settlement is its audacious use of class action law. As my former colleague Mark Moller has argued, the aggressive use of class action law raises fundamental issues of fairness, due process, and the separation of powers. Rather than dozens of judges hearing individual cases and reaching judgments based on individual circumstances, class action law often asks a single judge to render justice on behalf of thousands of plaintiffs in a single decision. This arrangement opens the door to a whole host of potential problems. A single judge unlikely to have the knowledge required to render justice in thousands of individual cases simultaneously. And there’s a real danger that a nominally judicial proceeding will take on a fundamentally legislative character, reshaping the rights of thousands of people whose interests are not adequately represented by any of the parties before the judge.

This danger is especially acute in the Google Book Search case because of the incredibly broad scope of the class the plaintiffs purport to represent: all authors of books still under copyright in the United States. The settlement class doesn’t just include authors and publishers of still-in-print works, who are relatively easy to contact and can opt out of the settlement if they don’t like its terms. It also includes the copyright holders for millions of “orphan works” – works that are in copyright and whose authors cannot be located. These copyright holders are, by definition, difficult to find. The settlement effectively expropriates these absent parties for the benefit of Google and the large publishers leading the lawsuit.

The usurpation of the legislative function is especially clear in the case of orphan works because Congress has been actively considering legislation to deal with the orphan works problem. I have written in favor of an “orphan works” defense to copyright infringement. The leading orphan works proposals have two key features: they require prospective users of orphan works to make a good-faith effort to find rights-holders before using the works. And they are competitively neutral – everyone would have equal opportunity to use orphan works under the conditions set forth in the legislation.

The Book Search deal has neither characteristic. Using the legal fiction that the plaintiffs represent the interests of millions of absent copyright holders, the settlement would give Google carte blanch to use these orphan works without making a serious effort to contact their owners. This deprives some copyright holders of royalties to which they might otherwise be entitled. And it gives Google a permanent competitive advantage by giving Google an immunity to litigation that would not be available to competitors if they entered the same market. Not surprisingly, Google’s leading competitors, including Microsoft, Yahoo! and Amazon.com, have all urged the judge to reject the agreement.

Our system of government is based on the principle of the separation of powers. Congress, not the judicial branch, is responsible for making broad changes to rules of copyright. The Google Book Search settlement, if approved, would use the legal fiction of the class action lawsuit to re-write copyright law as it applies to the online book market. While the settlement includes some laudable provisions, it’s more important that the judge respect the separation of powers and reject the settlement.