The US Justice Department has urged a New York court to reject Google's deal with authors and publishers that would allow the search engine company to create a massive online digital library.
The department says in a filing that the court "should reject the proposed settlement in its current form and encourage the parties to continue negotiations to modify it so as to comply with ... copyright and antitrust laws".
The filing is to a New York court considering settlement of a 2005 class action lawsuit. In that suit, authors and publishers accused Google of copyright infringement for scanning libraries full of books.
The proposed settlement, which was reached last October, would establish a registry to pay authors for works in Google's book search.
Likely to conclude anti-trust law broken
The department says it has not finished its investigation into the matter but that there is a "significant potential" that it will eventually decide the settlement broke antitrust law.
It notes that the "settlement appears to give book publishers the power to restrict price competition" and would give Google "de facto exclusivity" in distribution of orphan works - books that are in copyright but the rights holder cannot be located.
In a joint statement, Google, the Authors Guild and the Association of American Publishers said they were considering the points raised by the department and looked forward to addressing them as the court proceedings continued.
Rivals say Google is using the settlement to get near-monopoly status in the nascent digital book industry.