The U.S. Justice Department advised a federal judge on Sept. 18 that a proposed legal settlement giving Google Inc. the digital rights to millions of out-of-print books threatens to thwart competition and drive up prices unless it's revised.

The brief filed in New York federal court marks the first time that the Justice Department has publicly shared its thoughts about Google's agreement with a large class of U.S. authors and publishers.

The nation's top law enforcement agency began looking at the Google book settlement earlier this summer amid a loudening outcry against the agreement, which affects a huge reservoir of human knowledge.

"The breadth of the proposed settlement ... raises significant legal concerns," the Justice Department wrote in its 28-page filing with U.S. District Judge Denny Chin.

Despite its misgivings, the Justice Department expressed confidence that Google and the author and publishers could negotiate changes so the settlement will adhere to U.S. copyright and antitrust laws.

The Justice Department told Chin it hopes an acceptable compromise can be worked out, because the agreement "has the potential to breathe life into millions of works that are now effectively off limits to the public."

Even with those words of encouragement, the Justice Department's brief raises the biggest red flag about the settlement yet. The agency warned Chin it probably will conclude the deal breaks federal antitrust law unless changes are made.

Although other critics such as Google rivals Amazon.com Inc. and Microsoft Corp. also have objected in recent weeks, the Justice Department's opinion presumably will carry more weight with Chin. His approval is needed before the $125 million settlement can take effect, a hurdle that could be more difficult to clear with the Justice Department's assertion that the agreement would violate several laws.

"We are considering the points raised by the department and look forward to addressing them as the court proceedings continue," Google said in a joint statement with the Authors Guild and the Association of American Publishers, the groups that sued and then settled with the internet search leader.
Critics seized on the Justice Department's brief as validation of their arguments urging Chin to block the settlement.

"The current settlement proposal would stifle innovation and competition in favor of a monopoly over the access, distribution, and pricing of the largest collection of digital books in the world," said the Open Book Alliance, a group that includes Amazon.com, Microsoft, and another Google rival, Yahoo Inc. The alliance also includes authors and several nonprofit organizations.

The Justice Department's lawyers, as well as a long line of the settlement's opponents and supporters, will have an opportunity to elaborate on their arguments in a New York court hearing scheduled Oct. 7.