The basic story is simple: The Author's Guild Inc. has sued Google to stop it scanning books into its print initiative.
Donna's post in this blog just a bit ago summarizes some of the arguments around Google's "fair use" defense.

What's interesting to me at the moment is the way the messages are being carried. Google has chosen to officially blog its response in its corporate blog. In its response it illustrates what such a search hit would look like and asserts that this is fair use. This chosen method of response is all the more interesting because the reportage on CNET of the original story contains no response from Google. This is because Google tried to put CNET into the doghouse with a year-long blackout on commentary. However, in order to explain why there's no comment from Google, CNET has chosen to link back to the original story that provoked Google's ire in the first place. So rather than letting the brouhaha die down, Google's and CNET's behavior continue to drive readers towards the story Google doesn't like. This is highly amusing.

From press releases to VNRs, companies have long struggled to get control of how their messages get out. A bad publicity moment can haunt a company for a decade or more (see P&G's ongoing fight against rumors of satanism). Google is rolling out a series of initiatives that could be revolutionary if widely accepted, or could be colossal failures - blog search, Google VoIP, etc. Whether or not it still cares about its much-publicized "don't be evil" motto, it certainly cares about how it gets its message across to the tens of millions of potential users of its services. A corporate blog is just one weapon in the arsenal and I'm quite sure we'll see Google making heavy use of it. Will other companies follow suit? Probably, but at a much slower pace. But as CNET is showing, blogs, web reporting, and the ability to link are not simple weapons. Google may find itself more hurt than helped by its current strategy.