Why the FTC Probe into Google and Apple Won't Matter
Yesterday the FTC declared it was investigating a potential antitrust violation between Google and Apple. The investigation is based on a 95-year-old law that prohibits a person's presence on the board of two rival companies when it would reduce competition between them. The board members shared between the two companies are Google CEO Eric Schmidt and former Genetech CEO Arthur Levinson.
Whatever the FTC's purpose in launching this probe may be, it does not appear as though it'll have a significant impact on either company.
Section 8 of the Clayton Antitrust Act of 1914 isn't used often because of its uncertain legal nature. "Antitrust experts say that investigations of interlocking directorates rarely lead to major confrontations between companies and the government," the New York Times reports. "The issue is rarely pursued, lawyers say, in part because it is difficult to prove the impact of the overlapping directors," writes the Wall Street Journal .
It's true that Google and Apple's ongoing competition (iTunes vs. YouTube; iPhoto vs. Picasa; iPhone OS vs. Android; Safari vs. Chrome) may appear to shrink the market, but using Section 8 as a scythe may be an ineffective way to investigate two companies on antitrust matters. If Google and Apple were actually behaving in a manner that suggested the two companies had monopolistic intent -- ahem Microsoft ahem -- the FTC surely would have pulled out a different section, or a different law altogether, rather than resorting to the most minimal of attacks.
Let's say Google and Apple are busted. What's the worst that could happen? Eric Schmidt and Arthur Levinson will quietly resign from one of the conflicting boards, and then the problem goes away. Resignation avoids massive legal battles and lengthy investigations and does not necessarily imply wrongdoing on either party's behalf. Basically, the problem is so easily fixed it's almost not worth addressing at all.
It's interesting to note how Google has thus far played nicely with the Obama administration. "Mr. Schmidt campaigned for then-Senator Barack Obama during his presidential campaign and advised the transition team and the administration on various matters. He was recently appointed to President Obama's advisory council on science and technology," the Times reports. So if Google and Obama hold hands, why is the FTC going after them in the first place? It's my guess that the FTC is merely positioning itself so as not to appear biased or too closely in bed with a particular organization. The inquiry itself will likely prove fruitless and ultimately, be a minor blip on a massive radar screen.