Apple finds more antitrust trouble
There are more problems ahead for Apple in the antitrust area. Now, the Department of Justice has added personnel and collaborative conspiracy with Google on operating systems to the probe.
Apple was already in trouble for having a Board of Directors that overlaps with Google’s board. According to Section 8 of the Clayton Antitrust Act, companies with “interlocking directorates” face limits on sharing information through common board members. Those shared board members are Eric E. Schmidt, chief executive of Google, and Arthur D. Levinson, chief executive of Genentech.
There have also been allegations regarding the hiring practices of Apple and Google, which has added Yahoo and Genentech to the mix. At issue is whether or not the four have illegally coordinated their hiring practices when hiring their best and brightest employees. Justice is investigating the practices of all four firms, involving some of the same people that are at the heart of the Board-member-sharing investigation.
The new Google operating system, which will be targeted at netbooks, at least initially, seems to also be problematic for Apple’s relations with Google. Andrew I. Gavil, an antitrust specialist and a professor at Howard University School of Law, has said, “The circle of sensitive competitive information between Apple and Google seems to be widening. The more you have potential overlap in products and marketing strategy, the more the F.T.C. might get concerned about a violation of Section 8.”
Neither Apple nor Google are commenting on any of these issues, according to a New York Times story. In their favor, Apple and Google already compete in cell phones (iPhone vs. Android software), Web browsers (Safari vs. Chrome), online media (iTunes vs. YouTube) and other online / cloud / local services, such as photo editing tools. Mr. Schmidt says that he recuses himself from Apple board meetings when the discussion turns to the iPhone. But not everybody is buying that.
Here are a couple of more quotes from critics of the Apple and Google sharing issues:
“Section 8 is there for a reason. It’s an attempt to apply a prophylactic safeguard against possible collusive action. It’s an easy statute to comply with, and one may question why Google hasn’t complied with it.” – James F. Rill, an antitrust lawyer with Howrey L.L.C. and a former assistant attorney general.
“The F.T.C. is going to have to be extra-sensitive to ensure there is nothing that interferes with the innovation that these two vigorously competitive companies have brought to consumers.” – David Turetsky, of the Washington law firm Dewey & LeBoeuf and a former antitrust lawyer at the Justice Department.
It seems that both apple and Google are unnecessarily courting problems with the Department of Justice. Maybe Schmidt would be better off spending more time at Google and less at Apple. And surely the two could flip a coin over Levinson. The law is pretty clear. What is not clear is why the two companies are paying little attention to it.
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July 10th, 2009
They probably need someone to give them a lesson in critical thinking and analogies 101.