Why Sharing Board Members Is a Bad Idea
I talked earlier this week about why Google shouldn't be in violation of the Clayton Anti-trust legislation because Google shares board members with Apple. I still believe that they aren't in violation.
That doesn't mean sharing board members is necessarily a good idea.
And the idea that Schmidt is also the CEO of Google makes it that much more of a conflict of interest. When questioned today on the matter, Schmidt told reporters:
“From my perspective, I don’t think Google sees Apple as a primary competitor.”
Mr. Schmidt said that if there were areas of competition between the two, he would recuse himself from discussions. He added that it was well known that he typically recuses himself from Apple board discussions related to the iPhone.
Come on! Primary competition? Sure Apple doesn't sell ads, and Google doesn't make hardware, but look at everything else. Google and Apple do in fact compete in a number of areas. As I said before, there is a laundry list of categories in which they compete:
- Smartphone software. iPhoneOS vs. Android
- Webpage building software iWeb vs. Google Pages
- Calendar software - iCal vs. GCal
- Document writing software - iWork vs. Google apps (Docs, spreadsheets and presentations)
- Feed reading software Mail.app vs. Google reader.
- Email software Gmail vs. Mail.app
- OS Software: MacOS vs. Android Linux
- They both give away photo editing software - Picassa vs. iPhoto.
- Web Browsers (both based on the same Open Source Webkit and sold for free) Safari and Chrome
- Web Services with Apple's MobileMe and Google's Google Apps and Gmail.
- Video services - Youtube vs. iTunes
Does information covering these products come up in board meetings? They'd have to. If CBS has a big deal with iTunes distribution, the board will see the financials. When Youtube negotiates a similar deal with CBS, Schmidt will have all the numbers he needs to make an (overly) informed decision. Not fair!
Schmidt likely knows a lot about Apple's netbook OS plans. Android is poised to enter the netbook category over the next few months. He'll know what Apple plans to do. Advantage!
If Apple is planning on expanding its online office suite, iWork.com, Schmidt likely knows how and can adjust Google Apps accordingly. Unfair!
I could go on and on.
Schmidt says he recuses himself from board meetings when the iPhone comes up. That has to be nearly impossible to do. The iPhone is Apple's biggest product right now and the company has to revolve around it. On the flip side, an Apple board member not knowing anything about iPhones wouldn't be making informed decisions.
While I believe it is currently legal for Google's CEO to be part of Apple's board, I don't think the strategic technology sharing advantages outweigh the possibility that important secrets could flow back and forth between the two companies. In fact, I don't see how they couldn't.
Just like Google pulled out of the Yahoo search deal last year under regulatory pressure, I think Schmidt will at some point soon pull himself off of Apple's board - perhaps under shareholder pressure.
Arthur Levinson, the other board member that both companies share, should pull out of one of the companies as well, though not necessarily Apple.