“It is because the parties wish to work with the DOJ to the fullest extent possible that they have engaged, and plan to continue to engage, in negotiations,” the groups wrote in their request to U.S. District Judge Denny Chin. “Nevertheless, it is clear that the complex issues raised…preclude submission of an amended agreement by Oct. 7.” And with that they asked if they could return to the court Nov. 6 with a revised settlement and a new timeline for hearings.

Though it’s not yet clear what form the revised settlement might take or what adjusted terms are being discussed, the opposition is already crowing over it. “This is a huge victory for the many people and organizations who raised significant concerns that this settlement did not serve the public interest, stifled innovation, and restricted competition,” the Open Book Alliance, an ad hoc group led by some of Google’s largest rivals, said in a post to its blog. “It’s also an enormous loss for Google, which had been saying for months that no changes were necessary to the settlement. Now, that settlement, as we know it, is dead.”

The Justice Department probe of the Google Books settlement is heating up. On Thursday afternoon, the agency officially opened an investigation into the deal, which would allow the search sovereign to make millions of books available online.

“The United States has reviewed public comments expressing concern that aspects of the settlement agreement may violate the Sherman Act,” wrote William F. Cavanaugh, a deputy assistant attorney general. “At this preliminary stage, the United States has reached no conclusions as to the merit of those concerns or more broadly what impact this settlement may have on competition. However, we have determined that the issues raised by the proposed settlement warrant further inquiry.”

The move is the strongest sign yet that the DOJ may block the settlement, which critics claim would grant Google (GOOG) a monopoly on orphaned works–copyrighted texts without an identifiable copyright holder. The notification, included below, is the first time the DOJ has confirmed the investigation publicly and said that it is indeed looking at possible violations of the Sherman Antitrust Act.

Odd that the letter was filed this week inasmuch as the “fairness hearing” that will determine whether final approval is given to the settlement is still months away. Clearly, Google’s recent public relations offensive claiming the company is just as vulnerable to competition as anyone else hasn’t had much effect.

Reached for comment, Google spokesperson Gabriel Stricker offered the following statement:

“The Department of Justice and several state attorneys general have contacted us to learn more about the impact of the settlement, and we are happy to answer their questions.

It’s important to note that this agreement is non-exclusive and if approved by the court, stands to expand access to millions of books in the U.S.”

2009.07.02 Order _ DOJ Letter –