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.