Based on our experience, we foresee that the best way for a search engine to make book content available will be by crawling content repositories created by book publishers and libraries. With our investments, the technology to create these repositories is now available at lower costs for those with the commercial interest or public mandate to digitize book content. We will continue to track the evolution of the industry and evaluate future opportunities.
So basically, Microsoft is committed to continue to give money to libraries and publishers to digitize their own books themselves and place the content on the web, and then Microsoft will just index those pages for them, thank you very much.
It certainly would have saved them some face if they had just left the content up, or transfered the 750,000 public domain books to another digital archive.