The “emergency library” was a gift on a silver platter for the publishers. It was a reckless and stupid action that made the worst case scenario that the publishers wouldn’t have been taken seriously about a reality.
Obviously the 1-1 lending was an issue to the publishers, but higher risk from a litigation perspective.
And it is strictly speaking not a thing that IA should be doing in the first place. They should have set up a completely different legal entity for this and kept them visibly separated on all fronts, especially online.
They really should have tried to work with the publishers to introduce maybe a reduced rate rental interface if a work wasn't available from their "digital library" as a loaned book. More work, but if they have loan mechanics worked out, then rental is just a payment above that.
Or, if Amazon had/has a rental system in place, just affiliate link through to amazon when unavailable for rent/purchase there... that could fund IA without the minefield at all
Obviously the 1-1 lending was an issue to the publishers, but higher risk from a litigation perspective.