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
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 Gigaom.com 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.