Press Release

Google And Apple Not Off The Hook


Tue, Aug 4, 2009 at 10:18 am

    The resignation of Google’s Eric Schmidt as a director of Apple’s board
    has failed to halt a government inquiry into possible antitrust

    Mr. Schmidt stepped down because the search giant’s business increasingly competes with Apple’s.

    The Google CEO recused himself when Apple’s board discussed the iPhone.

    In a statement the Federal Trades Commission said "we will continue to
    investigate remaining interlocking directorates between the companies".

    "We commend them for
    recognising that sharing directors raises competitive issues, as Google
    and Apple increasingly compete with each other," said the FTC’s Bureau
    of Competition director Richard Feinstein.


    Former Genentech CEO Arthur Levinson still serves on both boards.

    Consumer Watchdog has called for him to step down from either Google or Apple to avoid antitrust violations.

    "It took Eric Schmidt far too long to realise that the two roles are
    incompatible; that’s not surprising considering the clubby atmosphere
    of Silicon Valley," said the non-profit’s consumer advocate John

    "Nonetheless, we’re glad Schmidt finally did the right
    thing; we call on Levinson to act responsibly and choose one company or
    the other."

    News that the FTC will continue with its inquiry has highlighted a
    shift in how regulators are prepared to act under a new administration
    said Jo-Ellen Pozner, assistant professor of organisational behaviour
    at Berkeley’s Haas School of Business.

    "Clearly the tone has changed in Washington and that
    makes it more difficult for a marriage like this of Google and Apple at
    the board level to go unnoticed and not scrutinised.

    "When there is a visible conflict or issue like this,
    regulators will pay more attention to that sector. If these firms are
    smart they will regulate themselves and figure out which relationships
    they need to keep, or rectify or fix," Ms. Pozner told BBC News.

    The areas of competition between the two companies include mobile telephone technology and computer operating systems.

    Aside from the issue of competition, Ms. Pozner noted there were some
    practical reasons for Mr Schmidt’s much needed departure.

    "It would have been increasingly difficult to attend to
    board matters. Apple has a small board so there is not that much room
    for someone constantly recusing themselves from so many areas of
    discussion if you want an active board."


    Industry watchers said Mr Schmidt’s resignation will allow Google to
    take the gloves off and compete more openly with Apple. The danger
    warned one top blog is that it could also turn the company into public
    enemy number one.

    "If nothing else it does mark a shift in where power
    resides in Silicon Valley and who is the perceived enemy," said
    TechCrunch co-editor Erick Schonfeld.

    "For a long time you could say that Mr.. Schmidt on the Apple board was
    because both Google and Apple looked at Microsoft as the enemy, the
    main competition for different reasons.

    "As computing shifts to these web based apps it’s
    almost as if Google is taking the place as the most feared company in
    technology. Certainly for a lot of companies it has already taken that
    spot," Mr. Schonfeld told the BBC.

    "The bigger shift that is now happening is this shift
    to more web centric computing and Google wants to be the central player

    "They want to be the operating system of that world and
    that world doesn’t care if you are using a MacBook, an iPhone,
    BlackBerry or Android. All this stuff happens in the cloud," said Mr.

    "It’s not Goggle versus Apple. It’s really Google
    versus the old model of computing which increasingly means Apple has
    more in common with Microsoft."


    TechCrunch is not the only blog to warn of trouble ahead.

    The highly respected blogger Om Malik of has said that when
    it comes to the issue of smartphones the "battle between Google and
    Apple is going to get very ugly – as it should."

    He highlighted the recent decision by the iPhone’s App store to reject
    an application called Google Voice. That is now being investigated by
    the Federal Communications Commission.

    "As the Google Voice apps fiasco has taken on a life of
    its own, I have been busy pointing out that this battle was between
    Apple and Google."

    The timing of Mr. Schmidt’s resignation has also resulted in comment coming days after the FCC announced its inquiry.

    "The way I see it, he (Mr. Schmidt) got shown the door by (Apple CEO)
    Jobs. Back in May, Schmidt said he had no plans to resign from Apple’s
    board," noted Mr. Malik.

    For Harry McCracken, the editor and founder of Technologizer there remains a lot of unanswered questions.

    "I would love to know the back story here because it was late on Friday
    that the FCC news came out about it investigating the rejection of
    Google Voice and here we are a few days later and Mr. Schmidt has
    resigned from Apple.

    "From the outside it looks like there is a connection, but who knows?" said Mr. McCracken.

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