The prospect of the $125m deal which American publishers and authors have struck with Google coming to Europe is sending shockwaves through the industry. While publishers and authors are broadly supportive, booksellers fear the deal could drive them out of business.

"The deal would create, we believe, a monopoly in which booksellers would be locked out," said Tim Godfray, chief executive of the UK Booksellers Association. "We believe, moreover, that in the years to come Google will have huge influence on the pricing of all out-of-print and print-on-demand materials. Such an arrangement has the potential to put many booksellers out of business."

His European counterpart, Françoise Dubruille, director of the European Booksellers Federation, agreed, describing the deal as potentially "cutting the ground from under the feet of booksellers". "I think it would be very, very damaging to cultural diversity in Europe," she added.

The deal, which is still subject to approval by a federal court in Manhattan, was made after three years of negotiations between Google, American publishers and American authors. Authors and publishers had filed suit against the search engine over its plans to scan in-copyright books in libraries without permission from copyright holders, which the publishers described as "wilful infringement, to further its own commercial purposes, of the exclusive rights of copyright that publishers enjoy in various books".

If approved, the agreement would allow American internet users access to millions of titles, including the option to purchase access to in-copyright books scanned by Google.

Publishers and authors have cautiously welcomed the deal so far, in stark opposition to booksellers, who believe it could be the death knell for their businesses, already facing major competition online from the likes of Amazon, and squeezed on the high street by the extreme discounts offered by the supermarkets.

""Broadly speaking we welcome [the deal] as recognition of author rights," said Margaret Drabble, chair of the Society of Authors. "We appreciate [that bookselling] is in its own predicament…but authors can't worry about other people's positions, we've got to worry about our own."

The American Boy author Andrew Taylor, a former librarian, was more concerned about what it could mean for the high street. "Booksellers come out as losers in this deal however you look at it - there is nothing in it for them except the certainty of lost sales," he said. "Moreover, there is a very real danger that the Google deal will accelerate the trend towards online book retailing, which will affect authors and readers as well as the high street booksellers. However many books are available on the internet, we'll all be the losers when even more booksellers are forced to close."

Although Google has so far said nothing about plans to extend the deal outside America – with US bookshops unwilling to comment - booksellers say they believe that whatever is agreed in America will soon end up in Europe.

"On what we have seen to date we are very concerned - concerned about what might happen if the agreement were ever to be implemented in the UK. We think such an agreement here would not only be bad news for booksellers, but also for publishers and authors," said Godfray. "[It] is, in our view, a bridge too far. It puts Google in a very powerful position in the future as far as the distribution of digital content is concerned."

The EBF said it would inform the European Commission and ask it to investigate the situation. "We're not going to accept easily that European rights should be thrown away," said Dubruille.

UK publishers' and authors' trade bodies were reluctant to comment in detail on what Society of Authors secretary general Mark Le Fanu described as an agreement with "mind-stretching" implications, but both were broadly supportive of the Google deal.

A spokesperson for Google stressed the open nature of the deal, saying that its Book Rights Registry, which will distribute payments to authors and publishers, would be able to work with other third parties. "There is already an active online market that publishers, retailers, and aggregators have been developing for many years. We expect that market to continue to develop in an open and competitive fashion," the spokesperson added. "This is a non-exclusive agreement that was structured in a manner to encourage competition… We feel both the economic incentives and the efforts of the Registry will help to create a robust rights holder organisation that represents a large set of people."