The Federal Trade Commission began a probe earlier this year to explore the links between the Apple and Google boards of directors. While there are a variety of relationships between the two boards there is no implication of wrongdoing at this point. Whether or not the incestuous relationship between the two directly violates any regulations though, it still lies in an ethical shady area that calls into question whether or not the boards have the shareholder’s best interests in mind.
In a nutshell, Google CEO Eric Schmidt was on the Apple board of directors until he resigned this week. In addition, former Genentech CEO Arthur Levinson is a member of both boards, and former Vice President Al Gore is both a member of the Apple board of directors and a senior advisor to Google. There are some other cross-overs and overlaps as well.
The job of the board of directors is to represent the shareholders and to help guide and build the company to generate share value. It does make sense to involve successful business leaders on the board. Individuals with a proven track record of success are an asset to the board. But, when the companies are in competition with one another there is a conflict of interest and the board members cannot possibly represent both parties’ best interests in good faith.
The conflict between the companies and the boards has been escalating recently. Apple has long been established in the computer operating system market, is struggling to gain market share with its Safari web browser, and took the mobile phone industry by storm with the iPhone. We assume that Schmidt, Levinson, Gore and other board members have all been involved in the development and strategy behind these products.
Somewhere along the way, Google decided that being synonymous with Web search was not enough and expanded its horizons. Coincidentally, they designed a web browser, and a mobile phone platform, and announced a desktop operating system. Recently Apple’s rejection of the Google Voice app for the iPhone has generated some user backlash and caught the attention of the FCC which is investigating whether or not Apple is abusing their position in the market.
Speculation about the reason behind the Google Voice rejection has centered around the mobile service provider, AT&T, and whether or not they exerted any influence to prevent users from circumventing their services and sapping revenue potential. However, there is another rumor that perhaps Apple has aspirations to develop Google Voice like features into MobileMe and they don’t want the competition on their iPhone platform.
There may not be any clear violation, but it is hard to imagine how any individual can represent both boards in good faith when they are in direct and indirect competition on so many levels. It suggests either some level of collusion between the two, or some degree of corporate espionage or ‘sleeping with the enemy’.
Its not just Apple and Google either. The boards of directors of many major corporations have similar incestuous connections of good ‘ol boys scratching each other’s backs. Apple and Google are just one example of how boards of directors tend to look out more for one another than they do the companies and shareholders they are elected to represent and a symptom of larger issues with corporate America.
Tony Bradley is an information security and unified communications expert with more than a decade of enterprise IT experience. He provides tips, advice and reviews on information security and unified communications technologies on his site at tonybradley.com.