Google’s e-book deal could slow rise of Amazon Kindle in Europe

Google (s goog) announced a major deal this week with French authors and publishers that clears the way for the sale of millions of e-books that have been caught in legal limbo until now. The deal could spur digital publishing in Europe and also shape which companies gain control of the continent’s fledgling e-book market.

Under the terms of the agreement, more than 600 French publishers and a major writers group will drop lawsuits over Google’s decision to scan books without permission and the publishers will begin selling digital versions of the books. The deal will let publishers keep control over which e-books are sold and will require Google to create a list that helps authors keep track of their copyright.

This week’s agreement is significant because it coincides with a French law that creates a new royalty collection mechanism for e-books. Taken together, the developments mean that many of the legal obstacles that have halted the rise of e-book sales in France are now cleared. At the same time, the deal could also provide a template for the rest of Europe where e-book sales remain minuscule. In December, France’s former culture minister said the country was a “bridge head” for Google to the rest of the continent.

While it’s too early to say when (or if) the French e-book scheme will take off, there does appear to be one early loser in the deal. According to reports in Le Figaro and publishing site ActuaLitté, the agreement does not allow the publishers to distribute the digital books through Google’s direct competitors — read: Amazon (s amzn).

What this means in practice is that Amazon may be excluded from a significant volume of content at a time when it is expanding its push into Europe with the Kindle and app store (there are also reports the company may launch the Kindle Fire too). If the Google e-books take off, Amazon will be the odd one out as the e-books can be read directly on devices made by Sony or Barnes & Noble or through the Google Play app on Apple (s aapl) devices.

In an email, Google did not respond directly to the account in Le Figaro but simply stated, “There will be a number of ways to sell ebooks but as per our agreement with all the parties we can’t disclose the finer details of the deal.”

The significance of Amazon’s exclusion will turn on the value of Google’s French works. The Google collection is composed of out-of-print works which, by definition, exclude new books and bestsellers. That means Amazon is still free to make a play for the most valuable part of the digital book market. But in the bigger picture, the Google deal could present a strategic threat. This will be the case if it turns out that French publishers have been slow to digitize their own backlists (and rely instead on Google) and if the copyright list and other parts of the deal lead the search giant build deeper relations with the European publishing community.

For now, the French e-book market is worth a piddling $38 million — or less than one percent of the country’s $7.85 billion overall book market according to a new report. To see why e-books have been so slow to take off in France and elsewhere, see this article by my colleague Laura Owen who cites factors like cost and a lack of e-readers.