Antitrust, AI, and Fair Use: Current Cases Deciding Major Legal Issues for Publishers

by Craig Gipson

The year’s most consequential legal battles impacting publishers originate in an unsurprising place: the technology industry. From AI start-ups testing copyright’s murky waters to antitrust pressure on the tech giants readers use to discover titles and publishers bargain with to sell books, the law continues to wrestle with tech’s further inroads into the creative industries.

AI’s Evolving Legal Landscape

Like most things generative AI-related, current litigation and legislation is fragmented and moving at various speeds. On the issue of AI and copyright alone, no fewer than 15 major cases are pending in different federal courts involving many of the major AI players and content companies: OpenAI, Google, Microsoft, The New York Times, and Thomson Reuters to name a few. On the legislative side, the EU AI Act passed in May and will be enforced in phases beginning in 2025. Stateside, Colorado became the first state to pass broad AI legislation which will become effective in 2026.

In the courts, the sheer volume of parties and claims has slowed progress. Judges spent much of a preliminary phase sifting claims and consolidating parties to arrive at a manageable place to proceed from. On September 27, a federal court in Northern California sent its first AI-copyright case to an influential appellate court so guidance will be forthcoming. For now, we advise publishers to continue to treat AI-generated content as being ineligible for copyright protection and monitoring whether their authors’ content may have been used to train various AI models.

To aid in that monitoring, the EU AI Act will soon require transparency from large AI model providers.  Beginning in August 2025, companies providing “general-purpose AI models” accessible in the EU must make public a “sufficiently detailed” summary disclosing the content used to train the model. With the status of AI training and copyright infringement up in the air, this development spurred several AI providers to begin seeking licenses from content companies. News organizations were first to bite on licensing content for AI purposes, but AI providers are approaching book publishers now as well.

If your organization has not already done so, we recommend considering a policy for AI use by employees, contractors, and authors, as well as a review of contract clauses to cover various AI-related issues. ECPA and Flagler Law Group will continue to monitor AI developments.

Hachette Wins Victory Over the Internet Archive and “Controlled Digital Lending”

In September, an influential federal appellate court upheld Hachette’s copyright infringement victory over the Internet Archive. As we wrote in the December 2023 ECPA Legal Update, the case originated when the Internet Archive began “lending” scanned electronic copies of print books. As long as the number of scanned copies did not exceed the number of print copies acquired, the Internet Archive argued such a practice (so-called “controlled digital lending” or CDL) should be allowed under the fair use copyright exception.

The appellate court unanimously supported Hachette’s infringement claim, finding that “no case or legal principle” supports the notion that the one-to-one lending model of CDL was defensible under U.S. copyright law. At the crux of the Internet Archive’s argument was that CDL constituted a “transformative” use of the original work. The court resoundingly rejected that notion: “[the Internet Archive’s] digital books serve the same exact purpose as the originals . . . IA’s Free Digital Library is meant to―and does―substitute for the original Works.” Further, the court found allowing for the unauthorized distribution of electronic reproductions would “eviscerate” rights’ holders exclusive right to prepare derivative works.

With the appeal quickly dismissed, this looks to be the end of the road for libraries’ CDL fair use theory. The only remaining path would be a Supreme Court review, an option many commentators believe would be unsuccessful. The parties already agreed to a settlement once the appeal process ended, meaning publishers will recover the costs of defending their rights and one more attempted incursion on copyright can be put to rest.

Amazon and Google Face Continuing Antitrust Scrutiny on Multiple Fronts

A renewed groundswell of antitrust scrutiny followed the populist leanings present in both the current and previous administrations. A pending class action lawsuit challenges Amazon’s grip in the eBook market and federal regulators have demonstrated a recent willingness to show there is some bite behind their bark. In 2022, the publishing industry witnessed the Department of Justice (DOJ) block Penguin Random House’s purchase of Simon & Schuster. In August, the DOJ won another major victory—perhaps the most significant antitrust decision of the 21st century—in an effort to curb Google’s control of the internet search market. The government’s pursuit of the tech giants’ growing economic power did not stop there as cases against Amazon’s online marketplace position and Google advertising technology remain active.  These cases’ outcomes could be significant for almost all facets of the publishing business, from marketing and discoverability to contracts and pricing.

Customers who filed a class action lawsuit against Amazon cleared a major hurdle in 2024 as a federal judge allowed their claim to proceed to trial. The suit claims that Amazon’s “monopolization” of the eBook market results in “reduced competition” and “higher eBook prices for consumers.” Initially, the customers sought to portray Amazon’s eBook dealings as an antitrust-violating conspiracy, casting the online retailer and Big Five publishers as oligopolistic villains. But the court dismissed the group’s claims against the Big Five publishers as Amazon’s co-conspirators, casting the case’s sole focus on the actions of the online retail giant.

One major issue of interest to publishers will be the court’s evaluation of Amazon’s preserving its market dominance through anti-competitive contractual restrictions. Court documents accuse Amazon of “coerc[ing] eBook publishers into entering into contractual provisions that foreclose competition on price or product availability.” The provisions include Amazon’s well-known “most-favored nations” clause on pricing as well as other so-called “parity clauses” requiring publishers to notify Amazon of non-price-related terms offered to other eBook platforms and offering all eBooks through Amazon that are offered through other platforms.

That a federal judge dismissed the claims against the Big Five but found enough evidence against Amazon to continue is significant. This is especially true in light of Amazon fighting a two-front antitrust battle. The Federal Trade Commission (FTC) and 17 state attorneys general also filed suit against Amazon in the past year, claiming Amazon utilizes “a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.” While a federal judge dismissed part of the FTC’s claims on September 30, other claims remain to proceed.

A favorable outcome or settlement in either case could impact how publishers do business with Amazon. Some antitrust commentators do not expect a heavy-handed remedy such as the forced divestment of certain Amazon divisions, but believe behavioral adjustments are possible. This may include a prohibition against use of most-favored-nation or other parity clauses as well as submission to third-party audits to ensure compliance.

Meanwhile, Google lost its first antitrust defense against its search engine practices and continues to defend a second suit that its advertising technology business also crossed the monopolistic threshold. In August, a federal court sided with the DOJ that Google abused its monopoly position to box out competitors in the areas of general search services and general text advertising. The DOJ showed Google solidified its market dominance by paying billions of dollars to other tech companies to be the default search engine on devices and web browsers. Google then used its default position to collect more data than its competitors and improve its own search algorithms, creating a cycle of market control. Established as the overwhelming market leader in search, the judge found that Google inflated the prices of search ads beyond what would be reasonable in a free market. With liability established, the court will entertain potential remedies against Google in a separate proceeding as early as December. Google indicated it will appeal the ruling.

While the effect on search and advertising has the potential to hit Google hardest, its lawyers are also defending the company’s advertising technology practices. In a trial expected to wrap up in November, the DOJ claims Google also violated antitrust laws in advertising software that places ads on web pages. Google’s Ad Manager essentially holds split-second auctions for online advertising space each time a page loads. According to the DOJ, Google controls about 87 percent of this market, to the detriment of advertisers and sites selling ad space, especially news organizations, which must share a portion of that ad revenue with Google.

Should the DOJ prevail again, in theory it should make it easier for advertisers and publishers to switch ad tech platforms. The price of online advertising may also become more competitive as some antitrust experts believe portions of Google’s ad tech business would be broken apart. However, the major impact for publishers could be if this line of DOJ argumentation is successful. In addition to Amazon and Google, the government is pursuing similar claims against Apple and Meta (Facebook), which could significantly alter the tools of book marketing and eBook distribution.

This article is provided for informational purposes and is not intended as legal advice. This article was first published as an ECPA Legal Update.