The US Justice Department still thinks a proposal to give Google digital rights to millions of books threatens and stifles competition and are undermining copyright laws.

The opinion filled on Thursday is a setback for Google's 15 month effort that would give it a vast electronic library. It has worked with the Authors Guild and the Association of American Publishers since September 2009 to revise concerns over the program.

But rivals, academics, consumer watchdogs, state and even foreign governments urged US District Judge Denny Chin to reject the proposal.

While the DOJ commended the parties for substantially revising the settlement agreement in good faith, it was unequivocal in stating that the revision falls short of addressing the problems the DOJ identified originally.

The [revised settlement proposal] suffers from the same core problem as the original agreement: it is an attempt to use the class action mechanism to implement forward-looking business arrangements that go far beyond the dispute before the Court in this litigation, reads the DOJ's filing.

The Justice Department also said that Google's partnership with the publishers could turn into a cartel that would wield too much power over book prices.

Under the [revised proposal], Google would remain the only competitor in the digital marketplace with the rights to distribute and otherwise exploit a vast array of works in multiple formats. Google also would have the exclusive ability to exploit unclaimed works -- including so-called 'orphan works' -- without risk of liability. The [proposed settlement's] pricing mechanisms, though in some respects much improved, also continue to raise antitrust concerns, reads the DOJ's 31-page filing.

Despite its misgivings, the Justice Department urged the parties to make changes that would eliminate its legal concerns. The department provided a list of recommendations on how to achieve that.

Google spokesman Gabriel Stricker gave no indication whether the company and other settling parties are willing to amend the agreement again.

The Department of Justice's filing recognizes the progress made with the revised settlement, and it once again reinforces the value the agreement can provide in unlocking access to millions of books in the U.S., Stricker said.

French and German governments maintain the deal will infringe on the rights of their writers. And groups representing authors in Japan, New Zealand, Germany, Austria, Switzerland and Italy remain opposed.

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