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FTC still probing Apple-Google ties

By Kenneth Corbin on August 4, 2009 3:51 PM

Apple's announcement yesterday that Google CEO would give up his seat on its board might have been a necessary step to avoid an ugly confrontation with regulators in Washington, but the companies are still under the microscope.

For Schmidt was but one of the companies' shared directors.

Arthur Levinson, the chief executive of biotech giant Genentech, also serves on the boards of both Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG).

The Federal Trade Commission, which has been investigating the ties between Apple and Google since May, issued a statement of nodding approval in response to Schmidt's resignation, but seemed to indicate that Levinson's dual-role was still a problem.

"We have been investigating the Google/Apple interlocking directorates issue for some time and commend them for recognizing that sharing directors raises competitive issues, as Google and Apple increasingly compete with each other," said Richard Feinstein, the director of the agency's bureau of competition. "We will continue to investigate remaining interlocking directorates between the companies."

The potential conflicts of interest over shared board members have come into sharp relief as the companies' business objectives have been on an apparent collision course in recent months. First it was mobile (iPhone v. Android), then browsers (Safari v. Chrome), and now operating systems. Plus, last week brought the drama over Apple's rejection of Google's unified messaging application for the iPhone, which has invited its own regulatory review.

And, helpfully, the indefatigable Consumer Watchdog has weighed in on the issue, urging Levinson to follow Schmidt's example and "act responsibly and choose one company or the other."

Consumer Watchdog, which has a habit of putting out hasty press releases attacking Google for a host of issues, including some amusing annotated slideshows counterpunching against the talking points the search giant presents to Hill staffers and regulators. It once put out a press release announcing that one of its members planned to confront Schmidt at a speaking engagement in Washington.

What motivates this group to run such a tireless (if a bit sloppy) smear campaign against Google? A $100,000 grant from the Rose Foundation to "conduct a campaign to encourage Google to become the standard-setter in customer privacy protection" just might be the answer.

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