The libraries' permission to archive a work does not extend to giving the work to Google, who then uses it to redistribute (albeit in small pieces) and to drive their advertising engine. The facts here are as plain as can be, and aren't being subject to colorful interpretation.
The library gives the book to Google. Google copies it, and uses it for commercial purposes. That's illegal.
Many, many people agree, and have thus forced Google to react to modify the program in an attempt to mollify their critics. None of their modifications undo the original illegal act, however.
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