Google, Apple Under Antitrust Scanner

Against the backdrop of a possible launch of Microsoft Corp.’s (MSFT) new smartphone, federal regulators are now investigating if an overlap of directors on the boards of Apple Inc. (AAPL) and Google Inc. (GOOG) breach antitrust laws.

The Silicon Valley giants share two directors on their boards, Eric Schmidt, chief executive of Google, and Arthur Levinson, former chief executive of Genentech Inc. (DNA). The U.S. Federal Trade Commission is examining if such connections thwart market competition in software and services.

Under federal antitrust law, “interlocking directorates” is not allowed if it decreases competition between two companies in the same sector. This law, or the Clayton act, is seldom used and difficult to enforce. The typical outcome of violation under the act would be resignation of the concerned directors from one of the boards.

While Schmidt has been on Google’s board since 2001 and on Apple’s since 2006, Levinson has served at Google since 2004 and at Apple since 2000. Schmidt is known to withdraw himself from meetings when Apple’s board talks about the iPhone.

However, Google and Apple have a number of other software products where they are direct competitors, including Apple’s iPhone versus Google’s Android operating system in smartphones, Safari against Chrome in web browsers and iTunes in opposition to YouTube in the audiovisual space.

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