Apple, Google Facing Antitrust Scrutiny: Report
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The Federal Trade Commission has opened an investigation to determine whether sharing board members is a violation of antitrust laws, according to an unconfirmed report in the New York Times.
Google (NASDAQ: GOOG) Chairman and CEO Eric Schmidt and former Genentech CEO Arthur Levinson sit on both companies' boards. Under U.S. antitrust law, companies are barred from sharing board members when it would decrease competition between them.
While the search engine and hardware maker have a long history of collaboration, as Google continues to explore revenue streams beyond search advertising, it finds itself in increasing competition with Apple (NASDAQ: APPL).
Schmidt, who has served on Apple's board since 2006, is famously exuberant about the potential of mobile computing, saying recently that he expects revenue from mobile ads to eclipse Google's PC business in the next several years.
With its Android operating system, Google has dived headlong into the mobile space, powering devices that compete directly with Apple's iPhone. Schmidt reportedly recuses himself from Apple board meetings that concern the company's mobile plans.
But with Android heading for netbooks and other computing devices in short order, Google could soon be competing with Apple's laptop business.
Additionally, Google rolled out its own browser last year, Chrome, which competes with Apple's Safari, as well as the more popular Internet Explorer and Firefox.
Google and Apple, which declined comment for this story, could also find themselves in increasing competition in the digital-media arena, as Google's YouTube pursues deals with entertainment companies that cast it as more of a rival to Apple's iTunes for premium content on the Web.
The FTC investigation follows closely on word that the Department of Justice opened an antitrust review of the settlement Google reached with authors and publishers over its Book Search project.
The two inquiries have been widely interpreted as a sign that Google is under increasing scrutiny from a government that is expected to take a tougher stance on antitrust issues, despite the company's close ties with the administration.
Schmidt served as an advisor to President Obama and campaigned for him as a surrogate, and several Google employees were members of the transition team.
Last week, Obama tapped Schmidt to serve on the President's Counsel of Advisors on Science and Technology, a 20-person panel.
Google had a brush with the Justice Department in the previous administration, when antitrust attorneys threatened to go to court to block Google's ad partnership with Yahoo, pressuring Google into abandoning the deal.