Print 19 comment(s) - last by icrf.. on May 11 at 9:46 PM

The Federal Trade Commission is investigating Google CEO Eric Schmidt's potentially improper relationship with Apple, a competitor in the cell phone business. Eric Schmidt, refuses to resign from his directorship at Apple, a company which he has expressed great fondness for.  (Source: Gawker)
Eric Schmidt plans to stand his ground

Google chief executive Eric Schmidt is under investigation by the Federal Trade Commission for his potentially improper relationship with electronics giant Apple.  The FTC believes that Mr. Schmidt's directorships at the two companies, which compete in at least one sector, cell phones, may constitute a breach of antitrust laws.  However, despite the government pressure, Mr. Schmidt refuses to give up his relationship with Apple.

Eric Schmidt invested heavily in Apple over the last decade and on August 28, 2006 he was awarded with a position on Apple's board of directors.  Mr. Schmidt described his love for Apple, stating, "Apple is one of the companies in the world that I most admire. I'm really looking forward to working with Steve and Apple’s board to help with all of the amazing things Apple is doing."

Apple founder and CEO Steve Jobs returned the love, stating, "Eric is obviously doing a terrific job as CEO of Google, and we look forward to his contributions as a member of Apple’s board of directors.  Like Apple, Google is very focused on innovation and we think Eric’s insights and experience will be very valuable in helping to guide Apple in the years ahead."

Over the last few years, as a director at Apple, he has been responsible in part for designating broad policies and objectives, approving budgets, and completing other financial management.  Despite the jeopardy that Mr. Schmidt is currently in, he is fighting to retain his position.

He spoke to reporters at Google's Mountain View Headquarters in California, insisting that the relationship was on level, stating, "If there are issues on competitiveness, I recuse myself.  From my perspective I don't think Google sees Apple as a primary competitor."

When asked if he might quit Apple, he stated "it hasn't crossed my mind."

Also under investigation is Arthur Levinson, former CEO of Genetech, who also serves on both boards.  Google's legal counsel Kent Walker believes that tie is legal, stating, "The law is clear that there is a safe harbour under the Clayton Act for companies that don't have overlapping revenue in different areas, and we're comfortable with that position."

Some shareholders are angry with Mr. Schmidt’s relationship with Apple, though.  Brandon Rees, a representative of a group of major shareholders, states, "There is nothing to gain and a lot to lose. We don't want Google to become an antitrust devil like Microsoft did."

If Mr. Schmidt is found in violation of antitrust laws it would be a major blow for Google.  He would likely have to pick between his two worlds -- his life with Google, and his love for Apple. 

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RE: He gets what he deserves . . .
By icrf on 5/11/2009 7:30:56 AM , Rating: 2
Yeah, I'm confused. They overlap in one market, and that particular market has extremely heavy competition. It really doesn't look like there's anything wrong with it. Or am I confusing anti-trust with monopoly, and things like Android skipping multi-touch support are the real questions?

RE: He gets what he deserves . . .
By omnicronx on 5/11/2009 8:43:54 AM , Rating: 2
If he is on both boards and he is actively part of all decisions of both companies, than he would probably be in the wrong here. By the sounds of it though, he leaves the room when any conflicting topic comes up. I see nothing wrong with this, unless of course someone can prove he is giving away trade secrets, which I really doubt would make sense for him. He is on two boards after all, why jeopardize that? I don't see how he would make more money giving away trade secrets than being on two boards.

RE: He gets what he deserves . . .
By Motoman on 5/11/2009 11:26:08 AM , Rating: 3 me crazy, but it seems to me that the reason people are appointed to a board of directors is because the company expects to benefit from their guidance...

...and if you have a director who has to leave the room once in a while when a potentially taboo subject comes up - how is that properly giving the company the direction it expects?

If you were a salaried worker mid-level in the organization, and found it necessary to excuse yourself once in a while from company duties, I can't imagine you'd remain employed very long.

RE: He gets what he deserves . . .
By foolsgambit11 on 5/11/2009 11:29:44 AM , Rating: 2
Yeah, the antitrust issue here wouldn't be abuse of monopoly as much as collusion. I agree that it would be difficult to prove that the consumer was damaged by collusion, or that the companies gained a material advantage in the market.

But I think it's good that the relationship between the companies is investigated to ensure everything is above board. When you are two of the largest software companies on the planet, and you share two board members, it's a good idea to keep an eye on things.

RE: He gets what he deserves . . .
By icrf on 5/11/2009 9:46:07 PM , Rating: 2
In a competitive market, what's the difference between collusion and partnership? The only problem is if they are conspiring in secret to harm the market.

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