Technology.am (May 6, 2009) — The US Federal Trade Commission is probing the relationship between Apple and Google to determine if the companies are violating antitrust law.
A report by the New York Times explained that the investigation centers on the Section 8 provision of The Clayton Antitrust Act of 1914, which forbids “interlocking directorates,” a situation where directors serve on the boards of two competing companies.
It means under this federal antitrust law, a person is not allowed to sit on the board of two companies if it decreases competition between them.
Eric Schmidt, the chief executive of Google, and Arthur Levinson, the former chief executive of Genentech, serve on the boards of both Apple and Google. If the FTC were to take action in the matter, the largest consequence would call for the two members to resign from their duties as directors for one of the two companies.
Antitrust experts cited by Times stated that “investigations of interlocking directorates rarely lead to major confrontations between companies and the government.”
The article cited Andrew I. Gavil, an antitrust expert and a professor at the Howard University School of Law, who said, “Government actions under Section 8 are rare, but they are brought under circumstances when the presence of a common director on competing boards is likely to be anticompetitive.”
Apple and Google both collaborate and compete, although their competing products are rarely aimed at the same customers. Both companies produce web browsers and smartphone software, but in both cases Google aims its offerings at competing against the encroachment of Microsoft into its advertising business, with the Google Chrome browser positioned to replace Internet Explorer and the Android phone platform targeted directly at Microsoft’s Windows Mobile efforts.
Apple and Google have vested interests in continuing to cooperate against Microsoft whether or not the FTC forces changes to their boards memberships.
Apple relies on Google to provide a variety of information services on the Mac, Apple TV, and iPhone, including maps, search, and expanding efforts in YouTube integration.
They’ll keep an eye on this, but it’s likely some action will be taken soon.