Apple, Google Boards May Be FTC Targets

Google CEO Eric Schmidt's presence on the Apple board of directors is drawing the attention of antitrust officials at the Federal Trade Commission. Add in former Genentech CEO and current Apple board member Arthur Levinson's presence on the Google board and you have a possible violation of the Clayton Act, which bars the presence of competitors on each other's boards.

Apple and Google may find their cozy relationship on their respective board of directors under Federal Trade Commission scrutiny for possible antitrust violations. Google CEO Eric Schmidt and Arthur Levinson, former Genentech CEO, serve on both boards.

According to reports in the Wall Street Journal and the New York Times, FTC officials have launched the initial stages of an investigation for violation of the Clayton Antitrust Act of 1914, which bars the presence of competitors on a board if it reduces competition between the two companies. Citing unnamed sources, both publications claim Google and Apple have been informed an investigation is underway.

Google, Apple and the FTC maintained no-comment stances on the stories.

While Google and Apple are business rivals in a number of ways, they are also allies. Google, for instance, worked closely with Apple in developing Google services for Apple's iPhone. But Google and Apple are rivals in the mobile phone business with Google's Android operating system competing directly with the iPhone platform.

"Mobile phones, in particular, loom large in the future of both Google and Apple," the New York Times wrote May 5. "Much of Apple's fortunes these days are tied to the success of the iPhone. Google, for its part, has said repeatedly that one of its biggest strategic opportunities is to expand its online advertising empire into mobile phones."
While the involvement of two of technology's biggest names in an antitrust probe is sure to draw headlines, it remains unclear if the investigation will really gain momentum, particularly since the resignations of Schmidt and Levinson would resolve the FTC's concerns.
For Google, the FTC inquiry is the third time in the last year that government officials have questioned the search giant about its practices. The Department of Justice questioned last year's proposed non-exclusive advertising deal between Google and Yahoo. Both parties walked away from the deal due to DOJ pressure. The Justice Department is also reportedly questioning Google's proposed settlement with book publishers.
"It appears that Google is now in the sights of the antitrust enforcers," Samuel Miller, an antitrust lawyer who is a partner at Sidley Austin in San Francisco," told the Wall Street Journal. "Given its recognized dominance, it is going to be subject to greater scrutiny."