Siva Vaidhyanathan attempts to clarify his position on Google's decision to pause the Google Print library project, stressing that his concern "has more to do with the potential repercussions...in both courts and in Congress than with the project itself":

[Basically], I feared that if Google were to go whole hog toward this project then courts would have had to react to the massive scale of the copying (which Derek calls intermediary but the publishers consider substantial nonetheless). If Google lost, the statuatory damages would have been just as massive as the project itself. That lovely IPO? Gone. Generations of cool Google innovations? Never happen.

Laura Quilter has an excellent post on the debate, pointing out that there's another court we need to consider (emphasis, mine):

Well, Siva says Google is not a library. It's true that Google is not the mom-and-apple-pie ALA version of a downtown library, complete with modern atrium and skylights for Mayoral gatherings. But I think we have to push on "library" for a bit. The Internet Archive is certainly a library. My home collection is certainly a library. (It even circulates, and I have remote storage, and I recently began a belated investment in DVDs.) Libraries may be private, semi-private, public; for- or not-for-profit; paper or digital. Why is Google not a library?

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The massive amounts of media coverage given to the Google withdrawal confirm my opinion that tactically this sucks, for libraries, authors, readers and anybody else who actually uses copyrights. So much of this coverage is described as a copyright flap, Google’s copyright misstep, etc. The bounds of fair use have just shrunk in the court of public opinion, and that’s a much longer-lasting loss than American Geophysical Union, Napster or any other case.