Why Schmidt Had To Go

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What happens when the enemy of your enemy is no longer your friend? You cast him out, as Steve Jobs seems to have done to Google CEO Eric Schmidt, who today resigned his seat from Apple’s board. An alliance which began with a mutual distrust of Microsoft is now under strain because of a mutual distrust of each other. Google is not so much the enemy of Microsoft as it is the enemy of the old model of device-centric computing which both Microsoft and Apple represent.

The announcement comes on the heels of an FCC investigation into Apple’s iPhone App Store that was announced on Friday evening. The subject of that investigation is nominally the rejection of a Google app, Google Voice, from the App Store, but it is really an investigation into the closed and arbitrary nature of how apps get approved for the iPhone.

In other words, Google brought down the disapproving scrutiny of the FCC onto Apple on Friday night, and on Monday morning Schmidt resigned. It is difficult not to make a connection between these two events. The FCC investigation, of course, is never mentioned in the press release (that would only invite more pesky questions from the FCC). Instead, what Steve Jobs does say in the press release is that Google’s entry into mobile operating systems with Android and desktop operating systems with Chrome OS is increasingly becoming a “conflict of interest” for Schmidt. As a result, Schmidt had to go. It also says that both executives “mutually decided” it was time for Schmidt to resign. (I can only imagine how that conversation went. Jobs: “You are going to have to resign.” Schmidt: “Okay, but can I say it was my idea?”)

Regardless of how the resignation came about (maybe it was the other way around with Schmidt telling Jobs that the two companies were increasingly coming at odds with each other), what made the two men come to grips with reality all of a sudden? If nothing else, last Friday’s letters from the FCC was a wake-up call to Apple that Google stands on the opposite side of the fence when it comes to the evolution of the mobile Web. Google wants the mobile Web to be as open as the Internet. It’s entire mobile strategy is predicated on open access for all apps, devices, and services because that creates a larger, more vibrant, and more searchable mobile Web.

Apple is not about being open. It never has been. Every app on the iPhone (all 50,000 of them) must be approved individually, for instance. This difference in approach wasn’t a problem until Google started to have mobile aspirations of its own. Asked to choose between furthering Apple’s mobile agenda or Google’s, Schmidt must choose Google’s. It is his fiduciary duty. That conflict is only going to grow. And that is perhaps why Jobs says his “effectiveness as an Apple Board member will be significantly diminished.” Also, the more they compete, the more they expose themselves to antitrust questions from the FTC as long as Schmidt remains on the board.

Schmidt had to go. Not just because of the dust-up with the FCC and the Google Voice app. But because Google has a different set of agendas which already are putting strains on the relationship. Google wants to diminish the importance of any single computing device in favor of Web apps which sit in the cloud and are accessible from all devices—mobile phones, Macbooks, Dell laptops, or whatever. As much as is physically possible, it wants to replace the operating system with the Web.

Ultimately, that is a bigger threat to Apple than Microsoft ever was.

(Image via Photoxpress).

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