Rights holders suing to legitimately protect their IP is not extortion.
I'm not sure why you think indexing books for searches is equivalent to "digitize copyrighted works and display them for free".
Unless I am mistaken about this?
That seems to me just as much a violation of copyright law as having Daily Show clips on Red Lasso was. They're certainly not exempted as a service provider under the DMCA when they're uploading the content themselves.
As an author, I'm not opposed to this if I'm given the right to opt out, and I'm compensated for any sort of AdWords type stuff run along side it. But many authors will be, and Google didn't ask us or give us a way to opt out.
For me personally, I think it benefits me to have sections of my book there, so I'm happy about it. But I can certainly see why some authors wouldn't care for that at all, and it's not up to Google to decide how those rights holders' property can be used.
I talked to a former attorney who is now a literary agent (and who therefore may be biased) back when the suit first appeared and he said it was pretty much an open and shut case and that it was just a question of how much Google was going to lose.
1. You can opt-out, unless I'm misreading this: http://books.google.com/googlebooks/publisher_library.html#o...
2. How is this any different than web search? Google indexes the contents of websites and displays a snippet of relevant content based on what you search. What makes book search different from a legal perspective?
3. I highly doubt that Google would have continued to pursue this course of action if it was as open-and-shut as the attorney you quoted seemed to think.
2) I don't know, but clearly uploading clips of The Daily Show is illegal, and Google most certainly can't get away with that. Hell, they might not even get away with hosting a service to which other people upload clips of The Daily Show. Books would seem to be more like that, since they are copyrighted works that aren't publicly available for free on the web already, and instead must be actively uploaded.
3) You're right, they wouldn't and that's why they didn't. They settled the first suit that came along and paid $125 million plus ongoing royalties because they realized they were going to lose.
Another difference is that automated indexing has become inherent to web publishing, so much that people publish with the expection that Google will index their pages. Book authors, on the other hand, publish with the expectation that their works are not indexed in this fashion.