The company has confirmed to All Things D that it is actively investigating several opportunities, and is in talks with several partners about gambling on the Internet.

A Zynga spokesperson provided this statement to AllThingsD:

“We build games and experiences that our players want and love. Zynga Poker is the world’s largest online poker game with more than 7 million people playing every day and over 30 million each month. We know from listening to our players that there’s an interest in the real money gambling market. We’re in active conversations with potential partners to better understand and explore this new opportunity.”

As with any new entrant in the space, Zynga will have to fulfill several requirements, meaning any major rollout is still months away.

The San Francisco-based social games maker will have to wade through a maze of state, national and international regulations. It will have to secure the correct licenses, and it also needs the right technology to make betting over the Internet secure.

For either of these last two requirements, a partnership or acquisition of an online gambling organization or other technology would make the most sense, instead of starting from scratch.

However, the effort could easily pay off.

Zynga was one of the first online gaming companies on Facebook, and continues to dominate the platform today. If it is able to get its toe in the door, just as the laws change in the U.S., it could be a leader yet again.

Back in October, Zynga first started showing broad interest in the casino category.

Zynga founder and CEO Mark Pincus announced at a press event that the company was going to launch Zynga Casino, which would serve as a single destination on Facebook to build off its strong brand in poker.

Its first new game, which has not launched yet, will be bingo.

Until now, the company’s efforts have been limited to building social and mobile games that are given away for free and monetized through the sale of virtual goods.

Getting users to make bets and part with real money could prove difficult, even for a company that has so many dedicated fans.

One thing Zynga has going for it is that social games are frequently compared to gambling because of their addictive nature — both lure consumers into spending a few more dollars to continue playing.

The casino genre has also been quietly racking up big numbers on Facebook.

Besides Zynga Poker, which is the most popular poker game on Facebook, and one of the company’s longest standing titles, there are many other sleeping giants. Sean Ryan, Facebook’s director of game partnerships, has even called them “unbelievable monsters.”

Said Ryan: “It turns out that people are completely okay winning virtual currency that they can never cash out.”

If players actually have the chance to win money, who knows the size of the opportunity?

A Facebook spokesperson said the company does not necessarily see a future for gambling on the social network. “We don’t have any plans to get into real-money gambling,” she said.

It’s unclear if that eliminates others from experimenting. In the meantime, it hasn’t stopped game makers from exploring the category or the concept.

Last week, Seattle-based Double Down Interactive, which was named by Facebook as one of the most popular game makers of 2011, was acquired by video poker giant International Game Technology for $500 million. It has 4.7 million monthly active users playing a variety of games, including blackjack, slots, video poker and roulette.

The deal closely followed Caesars Entertainment’s purchase of Playtika, an Israeli game company known for its Facebook title Slotomania. Caesars bought the company in two stages, the first of which was rumored to be purchased for up to $90 million.

Caesars, which filed to go public in November, declined to comment because it is currently in its quiet period.

However, some of its plans were revealed in a document filed with the Securities & Exchange Commission. It said its Caesars and World Series of Poker brands are dedicated to online gaming, and will take advantage of real-money gaming as it becomes legalized. Right now, Caesars Entertainment offers games “for fun” in jurisdictions where online gambling is not yet legal, but has identified the legalization of online poker in the U.S. as “the largest opportunity in online gaming in the near term.”

Still, the biggest hurdle is the law.

Internationally, several countries have permitted gambling for some time, and those areas represent the most immediate opportunities.

But there are signs of the U.S. beginning to open up, too. On the day before Christmas, the Department of Justice gave the online gambling community an early present, according to a blog post written by Nelson Rose, a professor and lawyer.

“President Barack Obama’s administration has just declared, perhaps unintentionally, that almost every form of intra-state Internet gambling is legal under federal law, and so may be games played interstate and even internationally,” Rose wrote.

Essentially, what the Justice Department did was to issue a new interpretation of the Wire Act of 1961. Under the new ruling, it interprets the act as only outlawing bets on sporting events — not all events and contests, according to an article in the San Francisco Chronicle.

With that clarification in place, it will now be up to every state to pass legislation outlining operating procedures. So far, Nevada and the District of Columbia have moved quickly to enact laws. To get other state laws passed could be a lengthy process, especially during an election year.

In the meantime, launching games only in Nevada and D.C. doesn’t represent the big opportunity everyone was hoping for.

To be competitive against Caesars and IGT, Zynga may have to partner or acquire companies that already have the licenses in place or the necessary expertise.

Some of the more obvious candidates include Bwin, which operates PartyGaming.com and is traded on the London Stock Exchange; Betfair, and other operators, like Bodog, Bet365 and 888.com. Many are based in the U.K. and handle a variety of casino games and sporting contests there.

The entrance into a new market, such as gambling, would take substantial resources, and Zynga has them thanks to its public offering. In December, it raised $1 billion, making it the largest Internet IPO since Google.

So, will Zynga be the next “unbelievable monster?” Clearly, it is willing to try.

“It’s still too early to say what will happen as a result of this investigation,” the CNIL said. “However, we can already state that…Google did indeed record e-mail access passwords [and] extracts of the content of e-mail messages.”

Now, recording passwords and extracting them are two entirely different matters, and there’s no evidence of the latter. That said, this is still an unfortunate revelation for Google (GOOG), which has sought to downplay the implications of the breach by portraying it as a mistake and the data collected as inconsequential. Indeed, last month CEO Eric Schmidt excused the company for its misstep, saying, “There was no harm, no foul.”

No harm, perhaps, but there was certainly a foul–particularly since it now appears the data collected may have been protected by privacy laws.

Ironically, such data collection is a non-issue for all who actually heed the universal advice to secure their Wi-Fi networks–advice that comes in the documentation of every router and advice that Google itself gives the customers of Google WiFi. The FAQ for the service states: “In order to make our service easily accessible to a large number of WiFi-enabled devices, Google WiFi is an open-access wireless network, and our signal is not encrypted. However, users can achieve a secure connection by using GoogleWiFiSecure if their device supports WPA, WPA2 or 802.1x protocols (most laptops do)….As with any wireless network, users should take certain precautions to secure their online experience from security violations by third parties or unintentional security breaches.”

Plainly, Google feels its transgression falls into the latter category–not illegal, but an unintentional intrusion. As Google’s director of public policy, Pablo Chavez, wrote in a recent letter to the House Energy and Commerce Committee, “As an initial matter, collection of network information broadcast by WiFi routers (such as SSID and MAC address) is used to improve location-based services and is a lawful, established business practice….We believe it does not violate U.S. law to collect payload data from networks that are configured to be openly accessible (i.e., not secured by encryption and thus accessible by any user’s device). We emphasize that being lawful and being the right thing to do are two different things, and that collecting payload data was a mistake for which we are profoundly sorry.”

All chief editors and managers:

Google has officially announced its withdrawal from the China market. This is a high-impact incident. It has triggered netizens’ discussions which are not limited to a commercial level. Therefore please pay strict attention to the following content requirements during this period:

A. News section:

1. Only use Central Government main media (website) content; do not use content from other sources.
2. Reposting must not change title.
3. News recommendations should refer to Central government main media websites.
4. Do not produce relevant topic pages; do not set discussion sessions; do not conduct related investigative reporting.
5. Online programs with experts and scholars on this matter must apply for permission ahead of time. This type of self-initiated program production is strictly forbidden.
6. Carefully manage the commentary posts under news items.

B. Forums, blogs and other interactive media sections:

1. It is not permitted to hold discussions or investigations on the Google topic.
2. Interactive sections do not recommend this topic, do not place this topic and related comments at the top.
3. All websites please clean up text, images and sound and videos which attack the Party, State, government agencies, Internet policies with the excuse of this event.
4. All websites please clean up text, images and sound and videos which support Google, dedicate flowers to Google, ask Google to stay, cheer for Google and others have a different tune from government policy.
5. On topics related to Google, carefully manage the information in exchanges, comments and other interactive sessions.
6. Chief managers in different regions please assign specific manpower to monitor Google-related information; if there is information about mass incidents, please report it in a timely manner.
We ask the Monitoring and Control Group to immediately follow up monitoring and control actions along the above directions; once any problems are discovered, please communicate with respected sessions in a timely manner.

Additional guidelines:

– Do not participate in and report Google’s information/press releases.
– Do not report about Google exerting pressure on our country via people or events.
– Related reports need to put [our story/perspective/information] in the center, do not provide materials for Google to attack relevant policies of our country.
– Use talking points about Google withdrawing from China published by relevant departments.

[Image credit: Rich Anderson/Flickr]

Clearly, Google’s (GOOG) redirection of Google.cn to Google.hk and the implied reminder that Hong Kong is free and mainland China is not, did not go over well with Beijing.

Gang did not comment on the legality of Google’s new approach to China or explain how his country’s government will respond. But he did reiterate Beijing’s you-will-play-by-our-rules mandate to foreign business. Said Gang: “Any foreign company operating in China must abide by Chinese laws and regulations.”

Was he implying that China feels Google is violating its laws by offering an uncensored search service from Hong Kong? That’s not yet clear, though I’m sure it will become more so in the days ahead. Already, there are reports that Google searches for sensitive or banned terms conducted from China are returning error messages.

PREVIOUSLY:

• China: Google Broke Promise, Wrong to Stop Censoring
• Google Shutters Google.cn
• China to Google: Go Ahead and Leave, Ya Big Loser
• Report: Google Bailing on China in Early April
• Beijing to Google’s China Partners: Nice Site You Got There. Shame if Something Happened to It.
• China: We Are in Talks With Google. Also, We Are Not in Talks With Google.
• Chinese Scientists Recalibrate Google’s Evil Scale
• Chinese Schools Tied to Attacks on Google? Where’d You Read That, Mad Magazine?
• World War WAN: Google Hack Traced to Schools in China
• Nearly a Month After Debut, Google’s “New” Approach to China Still a Lot Like the Old One
• Google CEO: Ask Not What Google Can Do for China–Ask What China Can Do for Google
• China on “Google Farce”: Our Internet Is Open
• China to Google: No Worries, We Were Planning to Clone Those Android Phones Anyway
• U.S. State Department to Complain to China About Google Hack. Not That China’s Going to Listen.
• Microsoft: “Don’t Be Evil” Is Google’s Motto, Not Ours
• What’s the Chinese Word for Bing? Google Threatens to Leave China.

“Business is business,” the publication wrote. “But when it involves political tricks, business will come to an end soon. The more Google politicizes the issue, the less room it leaves for itself for further negotiations. And netizens here, who are known for their inclination for novelties, will simply move on to other search engines if Google pulls out of a large and growing market. The US company will be the biggest loser in all of this.”

China Daily’s editorial echoed a similar piece published a day earlier by China’s official Xinhua News Agency. It, too, accused Google (GOOG) of acting as a foreign-policy arm of the U.S. government.
The company is “politicizing” its threatened withdrawal from the country, Xinhua said, adding that accusations that Beijing had supported a hacker attack against the company are “groundless.”

“It is a great pity that the Google case told us the company’s aim of entering the Chinese market seems not for commercial reasons but to act as a tool to penetrate into the Chinese culture as well as into Chinese people’s values,” Xinhua wrote. “It is ridiculous and arrogant for an American company to attempt to change China’s laws. The country doesn’t need a politicized Google or Google’s politics.”

And then there was this from Sing Tao Daily: “I’m not sure if Google knows that its arrogance can easily remind the Chinese people of the ‘big powers’ that cracked open China’s door by warships and cannons in the 19th century….The only difference was military weapons in the past and Internet service today.”

Clearly, tensions between Google and China are escalating, and quickly. At this point, Google’s closure of its Chinese search engine seems more an inevitability than anything else.

A thankless task given that China’s unwavering stance on Internet censorship was reiterated today by Chinese Foreign Ministry spokesman Qin Gang. “Google’s statement from January 12 is groundless, and we are firmly opposed to it,” Qin told reporters. “China administers its Internet according to law, and this position will not change.”

As I said, a thankless task. Increasingly, it seems that Google (GOOG) is going to make good on its more-than-a-month-old threat to shut down operations in China rather than continue to filter search results in the country. Unless the company has reconsidered. As I wrote last week:

China is the world’s largest Internet market. But in order to operate in China, foreign businesses must abide by laws restricting Internet content, and Google has said publicly that it will no longer do so….“We are no longer willing to continue censoring our results on Google.cn…”

If that’s truly the case…why are censored results still appearing on Google.cn? Is the moral high ground the company claimed a month ago proving just a bit too high?

PREVIOUSLY:

• Chinese Schools Tied to Attacks on Google? Where’d You Read That, Mad Magazine?
• World War WAN: Google Hack Traced to Schools in China
• Nearly a Month After Debut, Google’s “New” Approach to China Still a Lot Like the Old One
• Google CEO: Ask Not What Google Can Do for China–Ask What China Can Do for Google
• China on “Google Farce”: Our Internet Is Open
• China to Google: No Worries, We Were Planning to Clone Those Android Phones Anyway
• U.S. State Department to Complain to China About Google Hack. Not That China’s Going to Listen.
• Microsoft: “Don’t Be Evil” Is Google’s Motto, Not Ours
• What’s the Chinese Word for Bing? Google Threatens to Leave China.

“We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.”

A dramatic announcement given that the Chinese government’s policy requires the company to remove certain sensitive information from its search results in order to have a presence in the country. Yet nearly a month after it was made, Google (GOOG) continues to censor search results in China, and it has said nothing about its efforts to reach a compromise with Beijing.

What’s taking so long?

Drummond’s statement–“We are no longer willing to continue censoring our results…”–was about as definitive as they come. But is Google following through or not?

Asked for an update on its discussions with the Chinese government and the future of its operations in the country, a Google spokesman told me the company doesn’t have any new information to provide.

“Our blog post announcing the matter remains our current statement of record on the issue,” he told me.

Yes, but since publication of that post, Google seems to have adopted a more amicable stance on the matter. During the company’s fourth-quarter earnings conference in January, CEO Eric Schmidt said Google was committed to retaining its presence in China.

“We wish to remain in China,” Schmidt said. “We like the Chinese people, we like our Chinese employees, we like the business opportunities there. We’d like to do that on somewhat different terms than we have, but we remain quite committed to being there.”

Of course Google is.

China is the world’s largest Internet market. But in order to operate in China, foreign businesses must abide by laws restricting Internet content, and Google has said publicly that it will no longer do so.

Again, Drummond’s words: “We are no longer willing to continue censoring our results on Google.cn…”

If that’s truly the case and Drummond’s blog post remains Google’s current statement of record on China, why are censored results still appearing on Google.cn? Is the moral high ground the company claimed a month ago proving just a bit too high?

“The launch we have been working on with China Unicom has been postponed,” a Google spokesperson explained.

The company offered no reason for the postponement, though it is obviously related to new uncertainties around its presence in China. Sources close to Google (GOOG) say the company simply felt it would be “irresponsible” to launch the phones in China at this time.

Google says it plans to hold meetings with Chinese authorities in “coming days,” though they’re not likely to be easy-going given recent messages from Beijing. This morning, a Chinese Foreign Ministry spokesman again stressed that foreign companies doing business in China must respect Chinese laws and regulations, adding, “Google is of course no exception.”

“We actually did an evil scale and decided not to serve at all was worse evil.”

– Google CEO Eric Schmidt on the company’s decision to offer a censored version of its search services in China, Jan. 30, 2006

Evidently Google is taking its informal “don’t be evil motto” a bit more seriously these days. The search sovereign threatened late Tuesday to pull out of its operations in China after detecting a “highly sophisticated and targeted attack on [its] corporate infrastructure originating from China.” Targeted in the assault: The Gmail accounts of Chinese human rights activists.

“These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China,” Google’s chief legal officer, David Drummond, wrote in a post to the company blog.

“We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all,” Drummond added. “We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.”

Shut down Google.cn, and potentially our offices in China? Hmm. What’s the Chinese word for “Bing”?

Drummond didn’t directly accuse the Chinese government of orchestrating the incursion, but he certainly seems to be implying there’s a link. And you’d think one would have to exist for Google (GOOG) to threaten pull out of a country that has more Internet users than the total population of the U.S.–even if its efforts to gain market share there haven’t met with the same success as in the rest of the world.

It’s tough to stake your claim in a country where the government favors the local rival and blocks your traffic if you fail to censor. Baidu’s share of the Chinese search market in the third quarter was 77 percent, up from 75.6 percent. Google’s share for the same period? Just 17 percent, down from 19 percent.

So, to some extent, Google can probably threaten to leave China because the country accounts for such a small portion of its revenue. On the other hand, China leads the world in Internet users and presents a hell of a market opportunity–large enough that Google willingly provided a censored version of its services as a prerequisite for doing business there. Or, rather, it used to.

At $395.50 Baidu shares are up more than two percent after hours on the news. Google shares are down 1.6 percent at $581.01.

Drummond’s post in full, below, as well as another on the safety of data on Google by Dave Girouard, President of Google Enterprise:

A new approach to China

Like many other well-known organizations, we face cyber attacks of varying degrees on a regular basis. In mid-December, we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google. However, it soon became clear that what at first appeared to be solely a security incident–albeit a significant one–was something quite different.

First, this attack was not just on Google. As part of our investigation we have discovered that at least twenty other large companies from a wide range of businesses–including the Internet, finance, technology, media and chemical sectors–have been similarly targeted. We are currently in the process of notifying those companies, and we are also working with the relevant U.S. authorities.

Second, we have evidence to suggest that a primary goal of the attackers was accessing the Gmail accounts of Chinese human rights activists. Based on our investigation to date we believe their attack did not achieve that objective. Only two Gmail accounts appear to have been accessed, and that activity was limited to account information (such as the date the account was created) and subject line, rather than the content of emails themselves.

Third, as part of this investigation but independent of the attack on Google, we have discovered that the accounts of dozens of U.S.-, China- and Europe-based Gmail users who are advocates of human rights in China appear to have been routinely accessed by third parties. These accounts have not been accessed through any security breach at Google, but most likely via phishing scams or malware placed on the users’ computers.

We have already used information gained from this attack to make infrastructure and architectural improvements that enhance security for Google and for our users. In terms of individual users, we would advise people to deploy reputable anti-virus and anti-spyware programs on their computers, to install patches for their operating systems and to update their web browsers. Always be cautious when clicking on links appearing in instant messages and emails, or when asked to share personal information like passwords online. You can read more here about our cyber-security recommendations.

We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech. In the last two decades, China’s economic reform programs and its citizens’ entrepreneurial flair have lifted hundreds of millions of Chinese people out of poverty. Indeed, this great nation is at the heart of much economic progress and development in the world today.

We launched Google.cn in January 2006 in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results. At the time we made clear that “we will carefully monitor conditions in China, including new laws and other restrictions on our services. If we determine that we are unable to achieve the objectives outlined we will not hesitate to reconsider our approach to China.”

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

The decision to review our business operations in China has been incredibly hard, and we know that it will have potentially far-reaching consequences. We want to make clear that this move was driven by our executives in the United States, without the knowledge or involvement of our employees in China who have worked incredibly hard to make Google.cn the success it is today. We are committed to working responsibly to resolve the very difficult issues raised.

Keeping your data safe

Many corporations and consumers regularly come under cyber attack, and Google is no exception. We recently detected a cyber attack targeting our infrastructure and that of at least 20 other publicly listed companies. This incident was particularly notable for its high degree of sophistication. We believe Google Apps and related customer data were not affected by this incident. Please read more about our public response on the Official Google Blog.

This attack may understandably raise some questions, so we wanted to take this opportunity to share some additional information and assure you that Google is introducing additional security measures to help ensure the safety of your data.

This was not an assault on cloud computing. It was an attack on the technology infrastructure of major corporations in sectors as diverse as finance, technology, media, and chemical. The route the attackers used was malicious software used to infect personal computers. Any computer connected to the Internet can fall victim to such attacks. While some intellectual property on our corporate network was compromised, we believe our customer cloud-based data remains secure.

While any company can be subject to such an attack, those who use our cloud services benefit from our data security capabilities. At Google, we invest massive amounts of time and money in security. Nothing is more important to us. Our response to this attack shows that we are dedicated to protecting the businesses and users who have entrusted us with their sensitive email and document information. We are telling you this because we are committed to transparency, accountability, and maintaining your trust.

The Federal Trade Commission filed suit against Intel (INTC) this morning, accusing the company of waging “a systematic campaign to shut out rivals’ competing microchips by cutting off their access to the marketplace.”

In its complaint (full text below), the FTC claims Intel used threats and bundled prices or other offers to encourage exclusive deals, hamper competition or unfairly manipulate the chip market.

The agency also alleges that Intel secretly redesigned certain compiler software in a way that deliberately stunted the performance of competitors’ chips. Intel then claimed the software performed better on its chips than on those of competitors, neglecting to disclose that performance differences were due largely to its compiler design.

“Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly,” said Richard A. Feinstein, director of the FTC’s Bureau of Competition. “It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits. The Commission’s action today seeks to remedy the damage that Intel has done to competition, innovation, and, ultimately, the American consumer.”

Significantly, the FTC complaint also takes issue with Intel’s behavior in graphics, accusing the chip maker of attempting to extend its monopoly to graphics processing units, which have become an increasingly important part of the PC industry.

“Having succeeded in slowing adoption of competing CPU chips over the past decade until it could catch up to competitors like Advanced Micro Devices, Intel allegedly once again finds itself falling behind the competition–this time in the critical market for graphics processing units, commonly known as GPUs, as well as some other related markets,” the FTC claims. “These products have lessened the need for CPUs, and therefore pose a threat to Intel’s monopoly power.”

The FTC charges that Intel has responded to this competitive challenge by embarking on a similar anticompetitive strategy, which aims to preserve its CPU monopoly by smothering potential competition from GPU chips such as those made by Nvidia. As part of this latest campaign, Intel misled and deceived potential competitors in order to protect its monopoly, the complaint alleges, adding that there is a dangerous probability that Intel’s unfair methods of competition could allow it to extend its monopoly into the GPU chip markets.

The FTC is seeking an order that would prevent Intel from using threats, bundled prices and similar tactics to encourage exclusive deals and hamper competition. The Commission’s action against Intel comes about a month after the chip maker settled its long-running antitrust dispute with rival AMD (AMD) for $1.25 billion.

Reached for comment, Intel called the suit “misguided” and “based largely on claims that the FTC added at the last minute and has not investigated.”

“This case could have, and should have, been settled,” said Intel general counsel Doug Melamed. “Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies–including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint–that would make it impossible for Intel to conduct business.”

Melamed further asserts that “The FTC’s rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated. It is the normal practice of antitrust enforcement agencies to investigate the facts before filing suit. The Commission did not do that in this case.”

The company’s statement in full, below:

Intel Comments on FTC Suit

SANTA CLARA, Calif., December 16, 2009 – Intel Corporation issued the following statement regarding the suit filed by the U.S. Federal Trade Commission (FTC): “Intel has competed fairly and lawfully. Its actions have benefitted consumers. The highly competitive microprocessor industry, of which Intel is a key part, has kept innovation robust and prices declining at a faster rate than any other industry. The FTC’s case is misguided. It is based largely on claims that the FTC added at the last minute and has not investigated. In addition, it is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct. These new rules would harm consumers by reducing innovation and raising prices.”

Intel senior vice president and general counsel Doug Melamed added, “This case could have, and should have, been settled. Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies–including the restrictions on lawful price competition and innovation set forth in the complaint–that would make it impossible for Intel to conduct business.”

“The FTC’s rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated. It is the normal practice of antitrust enforcement agencies to investigate the facts before filing suit. The Commission did not do that in this case,” said Melamed.

And the FTC’s complaint:

091216intelcmpt –

• 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.”