The Federal Trade Commission in the United States has started an inquiry into the close ties between the boards of Apple and Google. They are wondering if the close ties constitute a violation of antitrust laws now that the two companies are increasingly participating in the same markets.
Both Eric E. Schmidt, chief executive of Google, and Arthur Levinson, former chief executive of Genentech, sit on the boards of both Apple and Google. This isn’t necessarily a problem, were it not for the fact that the two companies are increasingly entering the same markets. The iPhone and Android, Safari and Chrome, iPhoto and Picasa, and so on.
The Clayton Antitrust Act of 1914 states that companies who are competitors may not share board members if it will reduce competition. This aspect of the Act (“Section 8”) is rarely invoked, but nevertheless, the FTC has already notified both companies of its intentions. It is not known whether or not the FTC has any specific market in mind it deems especially troubling.
“Government actions under Section 8 are rare, but they are brought under circumstances when the presence of a common director on competing boards is likely to be anticompetitive,” said Andrew I. Gavil, an antitrust expert and a professor at the Howard University School of Law.
Both Apple and Google, as well as the FTC, declined to comment on the matter.