Federal lawyers on Thursday told the US District Court in New York that despite "substantial progress" in a revised settlement between Google, The Authors Guild and other involved parties "issues remain."

"The amended settlement agreement still confers significant and possibly anti-competitive advantages on Google as a single entity," the DOJ said in a release.

"Thereby enabling the company to be the only competitor in the digital marketplace with the rights to distribute and otherwise exploit a vast array of works in multiple formats," it continued.

Despite good faith efforts by all sides, the amended agreement "suffers from the same core problem as the original agreement," the DOJ said in a "statement of interest" filed with the court.

Among DOJ concerns was the potential for Google to get exclusive control over "orphan" books that are no longer protected by copyright or the ownership of which can't be determined.

"The court should carefully examine whether there exists a means for rival distributors to access orphan and rights-uncertain works," said the statement, authored by assistant US attorney John Clopper.

Judge Denny Chin is to hold a hearing on February 18 on Google's vast digital book project.

"If approved by the court, the settlement will significantly expand online access to works through Google Books, while giving authors and publishers new ways to distribute their works," Google said late Thursday.

"We look forward to Judge Chin's review of the statement of interest from the Department and the comments from the many supporters who have filed submissions with the court in the last months," the California firm added.

The Internet giant noted that the DOJ filing recognized progress made in the revised settlement and "reinforces the value the agreement can provide in unlocking access to millions of books in the US."

The DOJ statement joins objections filed last month by online retail giant Amazon, Consumer Watchdog, half-a-dozen French publishing houses, fantasy fiction author Ursula K. Le Guin, the Open Book Alliance (OBA) and others.

"The Department of Justice has made it crystal clear that the proposal before the court is overreaching and cannot be approved, the OBA said in a release.

"We are particularly heartened that the government identified the anti-competitive consequences this proposal would have on digital book sales and the search market," the alliance added.

Amazon, which makes the popular Kindle electronic book reader and runs a digital bookstore of its own, said the revised agreement violates anti-trust and copyright law and urged the judge to reject it.

Google in 2008 reached a settlement with the Authors Guild and the Association of American Publishers to a copyright infringement suit they filed against the Mountain View, California company in 2005.

Under the settlement, Google agreed to pay 125 million dollars to resolve outstanding claims and establish an independent "Book Rights Registry," which would provide revenue from sales and advertising to authors and publishers who agree to digitize their books.

Amid objections from France, Germany, the US Justice Department and others, Google and the authors and publishers drafted the modified deal which is before the court.

The revised agreement narrowed the definition of books covered under the settlement to those registered with the US Copyright Office by January 2009 or published in Australia, Britain, Canada or the United States.

"The changes do not fully resolve the United States' concerns," said the DOJ statement.

The DOJ is wrong in concluding the settlement gives Google a competitive advantage, said former anti-trust attorney David Balto, now a senior fellow at the Center for American Progress.

"The DOJ's view is clouded by taking a microscopic and static view of an incredibly dynamic marketplace," Balto said.

"Ultimately the court will get this one right and approve the settlement because, as the DOJ acknowledges, it will bring profound benefits to millions of consumers."

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