“Microsoft and Yahoo!’s share of online paid search advertising queries in Australia was limited,” the Australian Competition & Consumer Commission said in its notice of approval. “In combining search engine platforms, Microsoft and Yahoo! may have been able to achieve the necessary scale to provide effective and sustainable competition to Google, which had a very large share of online paid search advertising queries.”

Great news for the two companies, whose plan to consolidate two of the search market’s three largest players is currently under review by antitrust regulators at the U.S. Justice Department. Should it be approved, Microsoft (MSFT) and Yahoo (YHOO) will together control nearly 30 percent of the U.S. search market, giving them a better chance to compete with Google (GOOG), which holds a roughly 65 percent market share.

“We continue to believe that this deal will create a true, competitive alternative in the marketplace that will benefit consumers, advertisers and publishers,” the companies said in a joint statement. “We remain hopeful that the agreement will close in early 2010.”

The judge presiding over the case, who’d been urged by the U.S. Department of Justice to reject an earlier version of the settlement, set that date during a morning hearing so brief that when MediaMemo’s Peter Kafka asked Google CEO Eric Schmidt about it at a company roundtable this morning, Schmidt was unaware a date had been set. When Peter broke the news to him, Schmidt didn’t have much of a comment, but he did speak briefly about the settlement and Google’s view of it earlier in the morning.

From Peter’s paraphrased notes on the session:

With respect to book search, we were doing something that we thought was appropriate. We were sued, and after three years of discussion we’ve come to a settlement. This is perfectly normal. From our perspective, this is a settlement we like, it’s a settlement we think they’ll like, and we’ll hear what the court says, within minutes. Let me reframe your question: There’s nothing particularly exclusive about what we’re doing. The rights registry we’re doing is for the benefit of orphan works. “It’s not a particularly good business for us. We’re doing it because we think it’s the right thing to do.” We don’t think the settlement is perfect, but we think it’s good.

Though it’s not yet clear what form the revised settlement might take or what adjusted terms are being discussed, Google and the authors and publishers it has allied with it have quite a few critics to appease, including academics, librarians, privacy advocates, would-be rivals and the French and German governments.

The Open Book Alliance formally launched the manifesto this past week with which it’s challenging Google’s settlement with authors and publishers. The organization now has a Web site and quite an array of allies–which include, of course, Microsoft (MSFT), Yahoo (YHOO) and Amazon (AMZN). And as if Google doesn’t have enough on its plate, turns out that all along, Microsoft has been holding regular “Screw Google” meetings, the bastards. Uh, I thought that’s what people pay good money to learn in Business School. On a happier note, Howard Stern fans everywhere were happy to learn that Sirius XM (SIRI) has debuted a device that can turn an iPhone or iPod touch into a full-fledged satellite radio.

Over in Personal Technology, Walt reviewed Snow Leopard and found it to be an improvement on its predecessor, but with a lot of the upgrades under the hood invisible to most users. Not the typical object of desire we’re trained to expect out of Apple. In Mossberg’s Mailbox, Walt answers reader email about choosing a vendor to buy a computer online and setting parental controls in Firefox. In The Mossberg Solution, Katie Boehret explores the trials and tribulations of BlackBerry and iPhone users switching one for the other.

More next week.

“The mass digitization of books promises to bring tremendous value to consumers, libraries, scholars, and students,” the Alliance says in its mission statement. “The Open Book Alliance will work to advance and protect this promise. And, by protecting it, we will assert that any mass book digitization and publishing effort be open and competitive. The process of achieving this promise must be undertaken in the open, grounded in sound public policy and mindful of the need to promote long-term benefits for consumers rather than isolated commercial interests. The Open Book Alliance will counter Google, the Association of American Publishers and the Authors’ Guild’s scheme to monopolize the access, distribution and pricing of the largest digital database of books in the world. To this end, we will promote fair and flexible solutions aimed at achieving a more robust and open system.”

Rallying behind that cry is an array of nonprofit author groups, library institutions, and Google (GOOG) rivals that includes the American Society of Journalists and Authors, the New York Library Association, Microsoft (MSFT), Yahoo (YHOO) and Amazon (AMZN), which only confirmed its membership in the Alliance today. All of these participants fear that the Google Book Search Settlement, which will restore access to millions of out-of-print books, could one day give the company a monopoly on the largest digital library in the world.

With a Sept. 4 deadline for submissions to the court reviewing the settlement approaching, we’re likely to hear increasingly more cries that the settlement is bad for consumers, libraries, schools, authors and publishers.

Digital Daily came bearing sad news on Monday: The Apple (AAPL) event scheduled for Sept. 9 will not have anything to do with a tablet computer. Just music. And from an organization vulnerable to Palm (PALM) poachers. Presumably, all managers present will be exercising caution and using peripheral vision. Netflix (NFLX) was the recent recipient of good news, as John reported this week: Analysts’ research shows that the DVD-by-mail business has a lot of life left in it. Now, if Google (GOOG) will just stay out of that business. The search giant, in any case, might be a bit preoccupied by the Open Book Alliance and that group’s opposition to its Google Book Search Settlement, the $125 million deal that will allow Google to digitize and monetize some 18 million books. Probably won’t be preoccupied for long, though.

MediaMemo returned this week with an explanation for why the relatively mediocre iPhone camera has become the favorite camera on Flickr: It’s already in your pocket, and no one wants to carry another gadget around. Which is likely to become a more common refrain as high-end handsets grab more marketshare than ever and the quality of secondary functions improves. Another common refrain: The one where media companies start charging for content, and people start paying. News Corp. (NWS) (which owns this Web site) is working on assembling the critical mass of publishers it believes is necessary for making this possible.

Over in Personal Technology, Walt Mossberg reviews a robotic investment adviser called Cake Premium and points out some of the reasons you may or may not want to follow its suggestions for what to do with your 401(k). From Mossberg’s Mailbox, Walt answers questions about Windows OS upgrades on the Mac, and some follow-up questions about DriveSharp. In The Mossberg Solution, Katie Boehret tests out Rosetta Stone’s (RST) Totale, a web-based language-learning system that might be the next best thing for immersing yourself in another culture.

“In the end, in attempting to ‘do no evil,’ Google has done exactly that. I say this not just as someone running a content site but also as an end user. If this inequity of support continues along these lines, we will see a continuing destruction of our journalistic enterprises–enterprises that are one of the core building blocks of our democracy. Last year, while addressing the magazine publishers and editors of the MPA at the Google Campus, Eric Schmidt suggested that the Web was a ‘cesspool’ and that it was up to the major journalistic brands to clean it up. Well, Eric, in a great many ways, Google has helped to create that cesspool, and as such I would hope that it can be part of the solution.”

– Forbes CEO Jim Spanfeller

Sources briefed on the matter say DOJ attorneys have contacted Google (GOOG) as well as the Association of American Publishers and the Authors Guild about the antitrust implications of the agreement. Presumably at issue here are concerns over the settlement’s opt-out terms–authors and publishers who don’t opt out have effectively opted in–and the fate of orphan works, books still in copyright but whose copyright owners are unknown.

Orphan works number in the millions and the fear is that this settlement gives Google a powerful blanket license for them. As Pamela Samuelson, director of the Berkeley Center for Law & Technology, recently noted:

An estimated 70 per cent of the books in the Book Search repository are in-copyright, but out of print. Most of them are, for all practical purposes, “orphan works,” that is, works for which it is virtually impossible to locate the appropriate rights holders to ask for permission to digitize them….The proposed settlement agreement would give Google a monopoly on the largest digital library of books in the world….Google will also be the only service lawfully able to sell orphan books and monetize them through subscriptions….Virtually the only way that Amazon.com, Microsoft, Yahoo!, or the Open Content Alliance could get a comparably broad license as the settlement would give Google would be by starting its own project to scan books. The scanner might then be sued for copyright infringement, as Google was. It would be very costly and very risky to litigate a fair use claim to final judgment given how high copyright damages can be (up to $150,000 per infringed work). Chances are also slim that the plaintiffs in such a lawsuit would be willing or able to settle on equivalent or even similar terms.

Samuelson concludes that the Book Search agreement as written is essentially a major restructuring of the book industry and an anticompetitive one at that. If that is indeed the case–and Google maintains that it is not–it’s worrisome indeed. Certainly, it’s reason enough for the DOJ to give the agreement a good once-over.

Just why Microsoft made that determination is unclear. What could have possibly happened to make it not just abandon adCenter Analytics, but to refer clients to rival services, including Google Analytics?