The New York Times is reporting that Google plans to begin selling ebooks by the end of 2009. "In discussions with publishers at the annual BookExpo convention in New York over the weekend, Google signaled its intent to introduce a program by that would enable publishers to sell digital versions of their newest books direct to consumers through Google. The move would pit Google against Amazon.com, which is seeking to control the e-book market with the versions it sells for its Kindle reading device."
TeleRead has a couple of posts around this announcement as well.
I'm betting it will be USA-only.