“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.”

Below, an excerpt from the suit and the document in full:

On or about early-June, 2009, Mr. Gawronski purchased for $0.99 an electronic copy of George Orwell’s “1984″ for use on his Kindle 2 from Amazon’s Kindle Store. He purchased the book because it was assigned to him as a summer homework assignment by a teacher at his high school.

On or about July 20, 2009, after reading online about Amazon’s practice of remotely deleting copies of “1984″ from Kindles, Mr. Gawronski powered on his Kindle 2 only to watch “1984″ vanish before his very eyes. Because “1984″ was the most recent book he had been reading on his Kindle 2 prior to July 20, 2009, the Kindle 2 powered on to the last page of “1984″ Mr. Gawronski had been reading. Within moments of powering on his Kindle 2 to this page of “1984,” the entire e-book disappeared as Amazon immediately remotely deleted it from his Kindle 2.

Mr. Gawronksi did not consent to Amazon remotely deleting “1984″ from his Kindle 2.

As part of his studies of “1984,” Mr. Gawronski had made copious notes in the book. After Amazon remotely deleted “1984,” those notes were rendered useless because they no longer referenced the relevant parts of the book. The notes are still accessible on the Kindle 2 device in a file separate from the deleted book, but are of no value. For example, a note such as “remember this paragraph for your thesis” is useless if it does not actually a reference a specific paragraph. By deleting “1984″ from Mr. Gawronski’s Kindle 2, this is the position in which Amazon left him. Mr. Gawronski now needs to recreate all of his studies.

Amazon_Complaint

Under the terms of the deal, the retailer will acquire all outstanding Zappos shares in exchange for roughly 10 million shares of Amazon common stock, valued at about $807 million, and some $40 million in cash and restricted stock. Amazon (AMZN) says the deal should be completed by fall.

“This morning, our board approved and we signed what’s known as a ‘definitive agreement,’ in which all of the existing shareholders and investors of Zappos (there are over 100) will be exchanging their Zappos stock for Amazon stock,” Zappos CEO Tony Hsieh said in a post to the company blog. “Once the exchange is done, Amazon will become the only shareholder of Zappos stock….

“We think that there is a huge opportunity for us to really accelerate the growth of the Zappos brand and culture,” Hsieh continued, “and we believe that Amazon is the best partner to help us get there faster. Amazon supports us in continuing to grow our vision as an independent entity, under the Zappos brand and with our unique culture.”

“Zappos is a customer focused company,” said Amazon CEO Jeff Bezos in a statement. “We see great opportunities for both companies to learn from each other and create even better experiences for our customers.”

If the shoe fits, right?

Below, Bezos announces the acquisition in person.

Amazon (AMZN) hasn’t yet commented on the settlement beyond the filing, which offers little more information than that it was “unanticipated” and will be charged to “other operating expense” in the second quarter.

Such a drastic expansion of Apple-related show floor space will no doubt inspire speculation that the Mac maker plans to put in an appearance at CES. But that seems unlikely given the company’s reasons for bowing out of Macworld. “Apple is reaching more people in more ways than ever before, so like many companies, trade shows have become a very minor part of how Apple reaches its customers,” the company said at the time. “The increasing popularity of Apple’s Retail Stores, which more than 3.5 million people visit every week, and the Apple.com website enable Apple to directly reach more than a hundred million customers around the world in innovative new ways.”

In any event, this is unfortunate news for Macworld and IDG, the publishing company that runs it. Without Steve Jobs or even Apple (AAPL) to help it upstage CES as Macworld has done in some years past, the event has far less to offer attendees and presenters than before. Certainly, no one is going to be decamping from Vegas in the middle of CES this year to hit Macworld. There’s no reason to. And with CES ramping up its efforts to woo Apple accessory manufacturers and retailers, well, things aren’t looking too good for Macworld, are they?

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• Apple Investors: “Philnote” Just Doesn’t Have the Same Ring to It
• Oh My God, They Killed Macworld! You Bastards!
• Macworld Without Steve? That’s Like “Baywatch” Without Hasselhoff

“We believe Wal-Mart is actively pitching Apple to carry more products,” Reitzes said in a research note this morning. “With Wal-Mart improving its retail displays, we believe that the mega-retailer could eventually earn the right to sell select Mac products without diluting Apple’s brand….Apple is very particular and exclusive with who sells its Macs and any ‘Mac experiment’ with Wal-Mart would likely start very gradually via a pilot program at first–just like Mac sales started at Best Buy….While we don’t expect an immediate impact this year and believe Apple would need to reposition its line-up first, we believe that closer ties to Wal-Mart makes sense.”

Indeed, Wal-Mart (WMT) could certainly bolster Apple’s (AAPL) distribution, particularly in areas without Apple Stores. A compelling proposition: broader access to the mass-market consumer without the infrastructure costs of a standalone boutique. And surely Apple has overcome its aversion to Wal-Mart now that the big-box retailer has been peddling its iPhones for so long.

Amazon has weathered the recession better than most, but not without a concession… or three.

The retailer said Thursday that it is shuttering a trio of distribution centers in three states and will sack or transfer the 210 employees who work at them. It’s the first time Amazon (AMZN) has closed a warehouse since 2006. Amazon spokeswoman Patty Smith described the closures as a balancing of the company’s fulfillment network, but its hard to view that as anything other than a euphemism for belt-tightening when a facility in Munster, Ind. that Amazon opened just a year and a half ago is among the three centers to be closed. Also shutting down: facilities in Red Rock, Nev., and Chambersburg, Pa.

“A variety of factors went into the plan to close these three buildings,” Smith told TechFlash. “We added approximately 3 million square feet of capacity in the North American fulfillment network in 2008, and will be converting a fulfillment center in Phoenix to accommodate our larger items (such as big screen TVs) and adding several hundred thousand sq feet to that facility. This additional capacity allows to the opportunity to better balance product mix and customer orders across the network year-round.”

The short, and obvious, answer to that question is “a hell of a lot.” In a note to clients today, Bernstein Research analyst Toni Sacconaghi argues that Wal-Mart (WMT) can sell between 800,000 and 1.3 million iPhones in 2009, though the retailer’s low price mantra may appear inconsistent with the iPhone’s market positioning. And that would seem to be a reasonable estimate. After all, Wal-Mart has some 2,500 retail outlets in the states, through which 100 million customers stream each week.

“The addition of Wal-Mart will roughly double the iPhone’s distribution in the US to nearly 6,000 outlets,” Sacconaghi writes. “We believe iPhone sales will benefit from the added distribution, though not proportionately; in our view, price (for both the device and service plan) is still the biggest hurdle to mass adoption…. With the iPhone already available at 3,000 Apple, AT&T (T), and Best Buy (BBY) stores, Wal-Mart likely does little to expand the device’s geographic reach. However, we believe Wal-Mart will have a greater impact on the iPhone’s demographic reach in terms of raising awareness and availability among lower-end consumers who are less likely to shop at the Apple Stores or BestBuy.”

One last point worth noting here, Sacconaghi puts little faith in rumors that Wal-Mart will offer a $99 4GB iPhone. “Could there be a cheaper iPhone at Wal-Mart,” he writes. “We think it unlikely, at least initially, but the idea is not completely unfounded. In our view, a $99 price point for the iPhone seems too low, but some modest discount is not implausible.”

A neat little feature, although why anyone would actively use it is beyond me. Text searches on Amazon Mobile–and Amazon’s iPhone-optimized site–are both easier and far, far faster. Why bother with the cumbersome “snap photo-submit photo-wait for Amazon to identify product in photo and its availability and price”?

What this application is clearly lacking and, frankly, just begging for, is a barcode scanner and real-time price comparison function. That would make it a killer app, indeed. And Snappr has proven barcode scanning on the iPhone is possible. The device just needs an improved camera for it to work….

A week after announcing the closure of a fifth of its stores. in the U.S., the struggling retailer succumbed to the inevitable and filed for bankruptcy protection.

This just weeks before the start of the holiday shopping season. A bleak portent for the retail sector.

“Despite aggressive efforts to secure vendor support, vendor concerns about the company’s liquidity and ability to pay for its purchases in this difficult economic climate have escalated considerably,” the company said in a statement. “Faced with the need to secure ongoing vendor support and to ensure adequate merchandise flow to stores during the important holiday season, the company has determined that it would be in the best interest of its stakeholders to file for reorganization relief under Chapter 11.”

BlockBuster must be thanking its lucky stars it chose to abandon its $1.3 billion gambit for the foundering electronics chain….