Filed last Friday, the latest version of the settlement is more limited in scope, but has still drawn the ire of critics, who claim it remains rife with “anti-trust, class action and copyright violations.”

Chin evidently disagrees, and Google (GOOG) is obviously quite pleased that he has done so. “The preliminary approval order sends a positive initial message; this agreement promises to benefit readers and researchers, and enhance the ability of authors and publishers to distribute their content in digital form,” the company said in a statement.

“We remain hopeful that the agreement will receive final approval from the court,” Google continues, “and will realize the goal of significantly expanding online access to works through Google Book Search, an ambitious effort to make millions of books searchable via the Web.”

In a statement of its own, the Open Books Alliance, one of the settlement’s harshest critics, warned Google not to get too, too hopeful. “Today, in an expected procedural move, Judge Denny Chin granted preliminary approval to the revised Settlement of Google’s copyright infringement lawsuit,” the group said.

“This is not a surprising development and is not any indication that the court will or will not accept the terms of Settlement 2.0,” the Alliance warned. “The same procedural preliminary approval was given to Settlement 1.0, and now sets up a court process that will allow those opposed to the revised settlement to let their objections known to the court. The U.S. Department of Justice has until February 4th to weigh in with the court, as their investigation into the matter continues.”

• Orphan works–books whose copyright holders are unknown–will be overseen by an independent trustee who will administer their licensing, not by Google.
• Books published outside the United States, United Kingdom, Canada and Australia will be excluded from the settlement.

Those are substantive alterations, but they clearly haven’t placated critics who accuse Google (GOOG) of attempting an “end-run around copyright law as we know it.”

The Open Book Alliance–a coalition whose members include the Internet Archive, Amazon (AMZN), Microsoft (MSFT) and Yahoo (YHOO)–has blasted the revision twice already, decrying it as “a sleight of hand” intended to distract people from Google’s continued efforts to establish a monopoly over digital content access and distribution.

“The proposed changes fail to address this deal’s fundamental flaws,” Open Book Alliance Co-Chair Gary Reback said in a vitriolic statement. “Despite Google’s effort to spin this deal, it does nothing to promote competition nor does it reform Google’s exclusive access and monopoly hold on this digital database of books. Their proposed ‘unclaimed works fiduciary’ will have zero authority to promote competition or expand access. It is a cynical diversion away from the parties’ continued reliance on the discredited argument that competitors can obtain access through the very means Google did–getting sued for copyright infringement and abusing the class action process. This deal remains rife with anti-trust, class action and copyright violations.”

“The cost of smart phones is considerably higher than feature phones for which the early termination fees were created years ago at $175,” said Verizon spokesman Jim Gerace. He added that the new $350 ETF declines by $10 per month through the life of the contract and customers can avoid it by buying their devices off contract and paying full retail price.

An interesting move for Verizon (VZ), which just last year agreed to pay $21 million to settle a class-action lawsuit filed by California consumers over the very early-termination fees it is now increasing. The plaintiffs in the suit alleged that Verizon’s ETFs were illegal under California law and that they were designed to unfairly lock consumers into long-term contracts and prevent them from switching carriers. When Verizon settled the suit, it denied any wrongdoing, insisting that early-termination fees are simply a means of recovering legitimate costs. And to some extent Verizon does have a point.

Full retail price for the Motorola’s (MOT) new Droid is $559.99. With a two-year contract, Verizon sells the handset for $199.99. Theoretically, that’s a $359.99 subsidy (I have no idea at what price Verizon purchases Droid from Motorola). So if Verizon allowed subscribers to break their contract after a month without paying an early-termination fee, the company would stand to lose money. And subscribers who did so could subsequently sell the device online and potentially make a profit, though a small one.

So it’s certainly understandable that Verizon and other carriers want to protect the subsidies they dole out for these new smart phones. And as noted earlier, Verizon’s new ETF drops by $10 each month a subscriber remains under contract. But at this rate, subscribers are still bound to pay a $110 termination fee in the 23rd month of a two-year contract. The contract is nearly over, the subscriber obligation to Verizon almost fulfilled, yet the company can still slap its customers with nearly a third of the full ETF if they break it at that time.

By month 23 of a two-year contract, does Verizon really stand to lose $110 if subscribers decide to switch carriers? Doesn’t seem likely if subscribers can walk away just a month later without consequence, taking their handsets with them.

Since Verizon is pro-rating the ETF, why isn’t it doing so in such a way that it zeroes out by the end of the contract?

And isn’t the fast pace of innovation in the smart-phone sector such that prices–for both component and device–are dropping so quickly that high ETFs aren’t really justified? Remember, you can get Apple’s (AAPL) iPhone for $99 today. When the iPhone debuted in 2007, it commanded a price of $499/$599, depending on model.

I’ve put those same questions to Verizon and will update here when I hear back. In the meantime, here’s what Consumers Union policy analyst Joel Kelsey has to say on the matter: “When people want to switch wireless services, the biggest cost they face is early termination fees. These fees are designed to lock people into long-term contracts and stop them from getting better deals. Early-termination fees make the marketplace less competitive. Verizon’s move is painful proof that it’s time for lawmakers to crack down on these fees.”

UPDATE: Verizon Wireless spokesperson Nancy Stark offers the following answers to the questions I posed above:

Your first question regarding the balance at month 23 or 24 assumes that, at that point, we have recovered all of our subsidy and up-front costs for every device. That simply is not so.

On your second question, while the pace of innovation plays a role in prices coming down somewhat, it also plays a role in driving up costs as more and more complexity that customers want is added to phones–from premium HTML browsers to high-resolution MP cameras with optical zoom; videoplayers; music players; dual processor chipsets; WiFi; very high display resolution, operating systems such as BlackBerry, Windows Mobile, Palm, Android–ALL with the added value (vs a desktop) of mobility, and ALL in one tiny device that ALSO allows you to talk to anyone from anywhere. phew! (by comparison, I recently paid $200 for a camera and all it can do is take pictures, and it has only middle of the road capabilities.)

But getting back to ETFs specifically. The most important point is that Verizon Wireless customers do not have to have an ETF at all if they do not want to. ETFs allow customers to have it either way: They can have no ETF and pay full retail for their device. OR, they can get a greatly discounted device by having an ETF.

“The settlement would alter the landscape of copyright law, for millions and millions of rights holders of out-of-print books,” Peters said. “It would flip copyright on its head by allowing Google to engage in extensive new uses without the consent of the copyright owner–in my view, making a mockery of Article One of the Constitution, that anticipates that authors shall be granted exclusive rights.”

The settlement, as Peters sees it, will allow Google (GOOG) to profit from the work of others without prior consent. “It could affect the exclusive rights of millions of copyright owners, in the United States and abroad, with respect to their abilities to control new products and new markets, for years and years to come,” she said. “In essence, the proposed settlement would give Google a license to infringe first and ask questions later, under the imprimatur of the court.”

One of the more blistering attacks on the deal to date, especially given its source: The nation’s top copyright official. But Google nevertheless dismissed it as unfounded: “We think the settlement is legal, and we think it is structured well within the guidelines of what you can do in a class action settlement,” David Drummond, Google’s chief legal officer, said during the hearing. “It certainly is not usurping Congress’s authority to do whatever it wants.”

A typically arrogant response from Google, though the company does appear to be conceding a bit of ground in the face of widening opposition to the deal. Responding to Peters’s criticism and claims that the deal will essentially grant Google a de facto monopoly over out-of-print books, Drummond said the company plans to make those works available to any book retailer.

“For the out-of-print books being made available through the Google Books settlement, we will let any book retailer sell access to those books,” Drummond told the committee. “Google will host the digital books online, and retailers such as Amazon, Barnes & Noble or your local bookstore will be able to sell access to users on any internet-connected device they choose.”

Sadly for Google, that conciliatory gesture did not go over well with critics of the deal. “The Internet has never been about intermediation,” Paul Misener, Amazon’s vice president of public policy, said of the company’s offer. “We are happy to work with rights holders without anyone else’s help.”

The Internet Archive’s Peter Brantley was even more disdainful. “I fail to see what’s really new here,” he told the Los Angeles Times. “It’s like Macy’s telling Sears, ‘You can sell Macy’s clothing.’ There’s no fundamental change of the conditions under which Macy’s acquires those clothes. Google remains in control.”

Familiar complaints to some iPhone 3G owners, or to anyone who’s spent any time in Apple’s support forums lately. Indeed, Apple recently acknowledged the device’s reception problems. That said, the company’s “twice as fast, half the price” messaging does include the caveat “actual speeds vary by site conditions,” which would seem to absolve it of Smith’s charges of false advertising. And, beyond that, those who are disappointed by the performance of their new iPhone 3Gs had 30 days to return the device without consequence. Which is not to say that iPhone 3G’s performance hasn’t been disappointingly subpar or that it’s unreasonable to demand that Apple (AAPL) fix it. Just that Smith had recourse other than a suit demanding that Apple pay unspecified damages in addition to repairing or replacing all defective iPhones.

Today brings news of the first lawsuit over the service and, oddly enough, it wasn’t filed against Facebook. It was filed against Blockbuster. Facebook member Cathryn Elaine Harris is suing the video chain Blockbuster (BBI) for its participation in the Beacon program. Her complaint alleges that Blockbuster violated the federal Videotape Privacy Protection Act when it shared information about her movie rentals and sales with Facebook without her consent. It seeks class action status and $2,500 for each violation of the 1988 statute.