Fed Eyes Apple and Google’s Boards, for Possible Antitrust Violation

May 5, 2009

(ChattahBox)—According to the New York Times, the Federal Trade Commission is taking a hard look at the makeup of the boards of both Apple and Google for a possible antitrust violation under the Clayton Antitrust Act of 1914, believing the two technology giants are a bit too cozy. The two corporations share two board directors, but the one shared director thought to have caught the attention of government regulators is none other than Google CEO, Eric E. Schmidt who serves on both his own as well as Apple’s board of directors.

In addition to Schmidt, Arthur Levinson, former chief executive of Genentech serves on both Apple’s and Google’s board of directors. Antitrust experts say Section 8 of the Clayton Antitrust Act is rarely enforced, and if it’s signaled as a problem, many directors will resign their board positions to avoid a battle with federal regulators.

The Clayton Antitrust Act prohibits shared directorates when it would reduce competition between two companies, and the federal government is said to have opened an official inquiry into the matter and already has advised the two companies of a possible antitrust violation.

Even if it’s determined there are no technical violations of Section 8 of the Act, it certainly raises eyebrows when a CEO of a major competitor sits on both company boards.

Christine A. Varney, the new head of the antitrust division of the Justice Department, is moving forward with enforcing federal antitrust laws, something that was not done much during the last eight years of the Bush administration. She last year, signaled out the search engine giant, Google as a possible source of antitrust concerns.

Google CEO Schmidt, despite being an Obama supporter and an appointed member to the President’s advisory council on science and technology, is not receiving a free pass on his company’s business operations.

Just last week it was reported that federal regulators were scrutinizing Google’s settlement agreement reached last October after a protracted copyright infringement lawsuit, brought against it by the Authors Guild and the Association of American Publishers. The antitrust concerns are said to be focused on Google’s exclusive copyright grab of orphaned works.

Although Apple and Google have in the past collaborated on mutually beneficial projects, such as Gmail and Google Maps, for Apple’s iPhone, they have also become major competitors in the smart phone market. Google developed a Linux based operating system, named Android that is becoming increasingly popular for mobile phones, such as T-Mobile G1 and is even about to be used for laptop computers.

Apple’s iPhone is a major competitor of Google’s Android based smart phones. Schmidt joined Apple’s board in 2006, five months before the launch of Apple’s iPhone and a year after Google developed Android. Google claims Schmidt recuses himself when Apple’s board discusses mobile phones.

Still, the continued presence of Google’s CEO at Apple’s board of director meetings, certainly raises antitrust questions.


Comments

8 Responses to “Fed Eyes Apple and Google’s Boards, for Possible Antitrust Violation”

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