Legal Eagles Ponder Why Google CEO Eric Schmidt Lingers On Apple's Board
Despite the threat of Google Chrome OS as another competitive front versus Apple, and in the face of multiple protests from bloggers and pundits, Google CEO Eric Schmidt refuses to step down from Apple's board of directors. Antitrust experts Gary Reback and law professor Eric Goldman express surprise at Schmidt's staunch refusal, which may have to do with differences in how Google and Apple make money.The digital ink barely dried on Google's blog post to announce the coming of Chrome operating system July 7, when journalists and bloggers ran stories suggesting Google CEO Eric Schmidt should remove himself from Apple's board of directors for violating U.S. antitrust rules.
The argument renewed a debate that began in earnest in May when The New York Times said the Federal Trade Commission was looking into whether Schmidt's place on Apple's board violates Clayton Antitrust Act of 1914.
The hardest thing for me to understand is why there is resistance on Eric's part. This is a real law, it has a very sound purpose, it's been on the books for a long time. I never heard of anybody fight over it. I'm kind of amazed by the resistance, to just acknowledge it, resign and move on. Why would you fight them, why would you push on that? If the government goes so far as to say they're investigating it, you'd normally expect an executive to say, 'I'm not doing anything wrong' but why let anybody raise the issue?Reback noted that under the Clayton Act, interlocking directorates are not considered an issue if the sales from products over which the companies compete is less than 2 percent of either company's total sales. "[Google's] point was that their product was given away free, so it doesn't come over the 2 percent threshold as it applies" to the companies' sales," Reback said.