About Schmidt: Does The FTC Really Think Apple And Google Are Too Buddy Buddy?

about_schmidtIn terms of big companies with an overall glowing public perception these days, two seem to stand above all others: Apple and Google. And the two share a lot in common — notably, a common enemy in Microsoft, and both share two board members. The latter is apparently the subject of a new FTC investigation into possible antitrust ties, The New York Times has learned.

Specifically, Eric Schmidt and Arthur Levinson sit on the boards of both companies. And section 8 of the The Clayton Antitrust Act of 1914 prohibits two companies from sharing the same board member(s), if it is going to decrease competition between the two. But, as the NYT notes, this is rarely enforced. And even if it were, it would be difficult to penalize, because the person would likely just resign from one of the boards. But it’s interesting nonetheless that the government is looking into this for a couple reasons — both involving Schmidt, who is of course, also the CEO of Google.

First, new antitrust chief Christine A. Varney, has a history of linking Google to the word “antitrust.” Last June, before she held the post, she said that Microsoft represented an antitrust threat for the last century, but that Google was the one to watch now. When she was named as the nominee, plenty pointed this out, saying that it was good that President Obama would choose someone who would take such a stance even with Obama’s close ties to Schmidt, who helped in significant ways to get him elected. More recently, Schmidt was appointed to the President’s Council of Advisors on Science and Technology.

The second reason that this is interesting is again because of Schmidt. He has been on Apple’s board for a number of years, and this has presented an interesting situation recently for the two companies. When discussing the iPhone in Apple’s board meetings, Schmidt has to excuse himself, since one of Google’s key products, Android, competes with the iPhone. This hasn’t been too much of an issue in the past since just as they compete, sometimes the two companies also help one another in terms of things like apps for the iPhone. But a report a few months ago indicated that Google may have decided not to include multi-touch support in Android at the behest of Apple.

If the FTC actually decides to seriously pursue this, it could well force Schmidt to step down from his position on Apple’s board. Sure, the two sides could fight it, but it would be much easier for everyone if he just did that. But is that what’s really going on here?

Going back to the Microsoft connection; it’s hard not to jump at the opportunity to speculate that it plays a roll in this FTC inquiry. The software giant is known to have a large and powerful Washington lobby — one that has done shady things in the past. But would it really use some of its clout to demand this sort of inquiry which rarely results in any kind of action? It seems a bit unlikely, but perhaps it’s possible if it really just wants to mess with Google and Apple. But again, that’s just pure speculation. Instead, this may just be a shot across the bow of Google by the antitrust team, letting them know that despite the close ties the administration has to Schmidt, it is watching.