May 5th, 2009
FTC investigating Google-Apple ties
It was back in 2006 that Google CEO Eric Schmidt joined Apple’s board at Steve Jobs’ behest. At the time, the pundits were full of speculation about the meaning of this appointment.
The speculation ranged from some sort of integration between advertising and iTunes to Apple buying Sun. The notion of the Apple-Google alliance against Microsoft made sense but somehow the attacks on Microsoft were never aligned. (Google really wants to cruch MSFT; Apple doesn’t.)
To this day, no one knows what, if anything, Schmidt and Jobs could be cooking up during the Google CEO’s visits to Cupertino. But, the New York Times reports, the Federal Trade Commission has become quite interested.
The FTC is looking at the relatively rarely used Section 8 of the Clayton Act, the Times reported, which governs “interlocking directorates.” These are generally not considered a problem unless the revenue from competing products is more than 2 percent of sales.
Obvious problem area: Google Android and Apple iPhone. While Android is not a product per se, it is a platform and the iPhone is clearly a platform. The iPhone is clearly more than 2 percent of Apple sales and while Android is not, the potential is clearly there. And Android may be used on netbooks, while Apple is said to be considering a netbook, too.
“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,” said Andrew I. Gavil, an antitrust expert and a professor at the Howard University School of Law.
Whatever’s going on with this investigation, one thing is clear. Schmidt’s work for the Obama campaign is not protecting him from very aggressive attention from the Obama administration. The Journal offered this assessment:
“It appears that Google is now in the sights of the antitrust enforcers,” said Samuel Miller, an antitrust lawyer who is a partner at Sidley Austin in San Francisco. “Given its recognized dominance, it is going to be subject to greater scrutiny.”
It’s not just Google, a former Justice Dept. official told the Times.
“I expect the administration to be aggressive, generally, on antitrust enforcement,” said Sanford Litvack, a partner at Hogan & Hartson. Last year, while working for the Justice Department, Mr. Litvack built a case to block a prominent advertising partnership between Google and Yahoo. “I don’t expect Google to either be singled out or to receive a free pass because of Schmidt’s relationship with the administration,” he said.
