Apple, Google board links cause ruckus
When two industry giants share members of their boards of directors, as do Apple and Google, it can draw attention. This time is has drawn the regulatory attention of the Federal Trade Commission.
The United States Federal Trade Commission is said to be looking into whether Apple and Google are breaking the laws against antitrust by sharing members of their boards of directors, according to an LA Times story. The investigation is to determine whether or not the participation of two members of both boards violates the “interlocking directorates” provision of the Clayton Antitrust Act of 1914, especially in such areas as mobile phone software and services (Apple iPhone and Google Android).
The two board members in question are Google chief executive officer Eric Schmidt (who says he recuses himself from meetings when Apple’s board talks about the iPhone) and Arthur Levinson, the chairman of Genentech Inc. If a problem is found, the solution could be as simple as the resignation of the shared directors from one of the two boards on which they serve, or it could be much more complex than that.
The basic legal issue is monopoly by non-competition. Gary Reback, an attorney at Carr & Ferrell in Palo Alto said, “The theory of the law when the Clayton Act was first passed is that the powerful people would sit on each other’s boards and not compete with each other. The overlaps between Google and Apple are obvious.”
Those areas of overlap are, indeed, not difficult to see. Apple designs and markets the iPhone 3G, which displays Google Maps and makes it possible for users to play videos from Google’s YouTube. The iPhone apps for both those services are bundled with the phone. Google, the proprietor of the world’s most popular search engine, developed Android, an operating system that runs on mobile phones. The two companies are also starting to compete in the area of operating systems, since computer makers offer Android as an alternative to Microsoft Corp.’s Windows. Apples iPhone OS is already a Windows Mobile OS competitor.
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