The FTC has opened an investigation into whether the close ties between Apple (AAPL) and Google (GOOG) constitute a violation of anti-trust laws, the NYT says.
The companies share a director, Arthur Levinson, the former CEO of Genentech, but it is likely Eric Schmidt’s presence on Apple’s board that is raising the FTC’s hackles.
The NYT: The Clayton Antitrust Act of 1914 prohibits a person’s presence on the board of two rival companies when it would reduce competition between them.
Antitrust experts say the “interlocking directorates” provision, known as Section 8 of the act, is rarely enforced. Nevertheless, the agency has already notified Google and Apple of its interest in the matter, according to the people briefed on the inquiry, who agreed to speak on condition of anonymity because the inquiry was confidential…
“Section 8 exists when you have a common director facilitating collusion so two companies coordinate their competitive strategies…”
As both Google and Apple focus increasingly on mobile (Android/iPhone), browsers, and other overlapping areas, the companies will increasingly compete with one another. They also both share a massive common enemy, Microsoft, which is where the collusion might come in.
The most likely resolution of this, in our opinion, is that Eric Schmidt will resign from Apple’s board. Even if the FTC doesn’t find that the companies are colluding, Eric’s presence on the board will increasingly raise questions.