Antitrust Investigation of Apple and Google Connections Doesn’t Add Up
11:35 pm, May 4th, 2009, Pete Mortensen
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Image via Innovation 2.0
Yesterday’s news that the Federal Trade Commission was investigating whether occasional collaborations between Apple and Google constitute anti-competitive practices is all the rage this morning. Apparently, a 1914 law makes it illegal for a person to sit on the boards of two companies if it will reduce competition between them. Apple and Google share two directors between their boards — so the only question is whether their presence has reduced competition.
And honestly, the answer is not at all. If anything, having Google CEO Eric Schmidt on the Apple board has made it more awkward as Android has started to diffuse into the market. Even though Google’s apps for the iPhone are among the best on the device, the proliferation of iPhone competitors from Le Goog is setting up for a head-on collision between Mountain View and Cupertino.
According to experts, even if anti-trust violations were determined, the likely upshot would just be for the directors to step down from one of their two boards. No biggie. But the case highlights that American business law doesn’t really understand Silicon Valley. Out here, it’s only natural that you would simultaneously compete and collaborate. You share secrets and then try to use them against each other. It’s in the DNA here. But the law, as they, is blind.
Posted by Pete Mortensen in Apple, Opinions | Comment on this article
Of course, no need to investigate big media strongarming startups into turning over control of their companies + a wad of cash in order to gain any access to their libraries. Or how magically all the music stores have remarkably similar pricing across the 5 different major labels.
dave, on May 5th, 2009 at 12:41 am
You have to admit, it makes sense to have a low prohibiting one person to be in the boards of two competing companies.
bas, on May 5th, 2009 at 1:07 am
low = law
bas, on May 5th, 2009 at 1:10 am
@bas: Actually, no, it doesn’t make sense “to have a (law) prohibiting one person to be in the boards of two competing companies”. Not at all. It may seem to make sense that a company wouldn’t want someone from a competing company on its board, but a law?!? No. First of all, define “Competitor”? (Apple makes a phone sold only for ATT Wireless, Google makes a phone sold only for TMobile. Is that competing?) Secondly, when the Googler joined Apple’s board, Google hadn’t launched Android so they weren’t competitors- so special stockholder elections have to be held every time a company announces a new product that might conflict?
Dicey waters….
Snozzwanger, on May 5th, 2009 at 3:23 pm