Schmidt May Remain on Apple Board, After All
Last week, Google dropped a virtual bombshell when it announced that it would eventually be releasing a Google Chrome OS geared for netbooks in the latter half of 2010. This is noteworthy because early last May, the Federal Trade Commission (FTC) announced that it would investigate whether or not the fact that Google CEO Eric Schmidt sits on the board of both Google and Apple violates the "interlocking directorates" portion of the Clayton Antitrust Act of 1914.
According to the law, an individual is prohibited from simultaneously occupying a board seat for two separate companies if those two companies are in direct competition with each other. The underlying rationale behind the law is to promote healthy and fair competition while preventing monopolistic behavior and collusion.
A few years ago, the idea that Google and Apple were competitors would have been laughable, but now both companies produce products that directly compete with one another. For example, Google's Android OS competes with the iPhone, while it's Chrome web browser competes with Apple's Safari. Still, Google and Apple's relationship has been anything but competitive, and with Google's Schmidt on the board, Apple has been able to leverage that close relationship to its advantage, whether it be via getting the Google-owned YouTube to encode its videos into H.264 for iPhone viewing, or asking it not to make the first version of its Android OS multi-touch capable.
With word that Google is now planning to enter the OS market, the idea that Apple and Google are competitors is gaining traction. As it stands now, Schmidt, who initially joined Apple's board in August of 2006, already leaves certain board of director meetings when sensitive iPhone information is up for discussion. Still, some have pointed out that while Apple and Google might produce competing products on first glance, those products tend not to compete for the same type of customers.
In any event, after Google announced its new OS initiative, Schmidt remarked about his dual board membership, "I'll talk to the Apple people. At the moment, there's no change."
Some pundits have recently demanded that Schmidt immediately step down from Apple's board due to a conflict of interest. The fact of the matter, however, is that if Apple truly saw a problem with Schmidt serving as a board member for both Google and itself, it would have no problem asking Schmidt to step down. Apple is notoriously paranoid about its future product plans, and you can bet that if Schmidt's presence on the Apple board would in any way hamper Apple's future financial or technological success, it wouldn't take long for either Schmidt to step down voluntarily, or for Apple to ask for his seat.