THE BLOG

Corporate Boards, Conflict of Interest and Copyright

10/16/2009 05:12 am ET | Updated May 25, 2011

Throughout the month of August the poker game of Internet business took a vacation as Amazon, Yahoo, and Microsoft lined up in opposition to Google Inc.’s attempt to digitize the world’s entire collection of books.  In an industry where bluffing reigns supreme and overt reaction against competitors is considered a sign of weakness, each of these companies announced that they would join an organization called the Open Book Alliance in defiance of Google’s nearly one-year old settlement with The Author’s Guild of America.

For years Google has been trying to find ways to digitize books that remain under copyright for Google Books, their ambitious book digitization program.  After a prolonged legal battle Google agreed last fall to pay $125 million to the Author’s Guild in return for what appeared to be a near full inversion of the United States copyright structure for printed authors. 

After the settlement, the Justice Department took interest in the case and began laying the foundation for an investigation into Google.  Two weeks ago, as it became clear that the department would pursue a full inquiry, Amazon, Yahoo, and Microsoft backed the Open Book Alliance, which was established by the founder of the Internet Archive, Google Books’ non-profit competitor.  The goal of the alliance is to ensure that no single corporation gains monopoly access to digitized books and information.

The idea of mass digitization of books is extraordinarily appealing, and Google is not entirely incorrect about the need for updated copyright laws.  Gordon Crovitz’s recent op-ed in the Wall Street Journal clearly explains how our now outdated copyright laws were once intended to support working authors, not to impede the spread of knowledge.  Nonetheless, Google’s approach is far beyond reasonable, effectively forcing authors to invoke their copyrights while setting the legal default that assumes Google’s right to full access, digitization, and dissemination.

Equally problematic is the fact that beneath the veneer of support for equal access by Amazon, Yahoo, and Microsoft, a number of their board members have direct or indirect conflicts of interest that should make their involvement in this inquiry untenable.  John Doerr, a member of Google’s board, is also a member of Amazon’s.  His colleague and partner at the investment firm Kleiner, Perkins, Caufield, & Byers is William Gordon, who also serves on Amazon’s board.  Former Vice President Al Gore is a senior adviser to Google as well as a partner at Kleiner. 

Amazon also has a board member serving in a senior capacity with the Bill & Melinda Gates Foundation and Yahoo board member Ron Burkle currently owns an 8.3% stake in Barnes & Noble.

An allegation of wrongdoing against the members of these boards would be unfounded, but it is difficult to envision how they intend to carry out their duties as directors without compromising the interests of their companies, shareholders, and colleagues.  An example of the danger of such close ties emerged last week when online classified giant Craigslist posted a blog claiming that a member of their board is, “uncomfortably conflicted,” and “obsessed with dominating online classifieds”.  The reason for their consternation is that the board member was appointed by eBay after the Internet auction company acquired 28.4% of their company last year.

Rewriting copyright law by proxy through Justice Department inquiries and legal settlements is a far cry from democracy, especially when one of the private citizens with an apparent conflict of interest is a former vice president. Much like the privatization of radio in the early twentieth century, non-elected citizens who win even when they lose are governing how old media will be used by new media.  It is difficult to believe that any non-profit alliance can address this problem, nor should it be asked to.  Copyright law and its application to the Internet requires Congressional attention.  Much about the world we know will be delegated to the barons of tech, and much already has been, but the governance of copyright cannot or we endanger our access to open information and the ownership of our own words.