In a media session held Thursday before Googles shareholders meeting in Mountain View, Schmidt said he hasnt considered stepping down from Apples board because he doesnt view the maker of the iPhone, iPod and computers as a “primary competitor.” He echoed that sentiment when a shareholder later asked him to step down from Apples board to avoid further government scrutiny.
Google attorney Kent Walker confirmed the Mountain View-based company is in talks with the Federal Trade Commission about whether its overlapping board relationships with Apple violates federal antitrust laws. The inquiry was reported by The New York Times earlier this week.
Both Schmidt and former Genentech CEO Arthur Levinson are directors at Google and Apple.
Walker told reporters that Google is “comfortable” that it doesnt generate enough revenue in the same markets as Apple for Schmidts and Levinsons dual roles on the companies boards to violate antitrust law.
Google makes most of its money from online advertising driven by its market-leading search engine. But it is the chief architect of an operating system called “Android” that already runs some mobile devices similar to the iPhone. Android also is going to be in some low-cost computers, called “netbooks,” later this year.
Schmidt, who joined Apples board in 2006, told reporters he always recuses himself from all Apple board discussions involving the iPhone, but doesnt avoid talks about any other subject.
Cupertino-based Apple and Google also both make Web browsers that are vying to lure users away from Microsoft Corp.s Internet Explorer and the Mozilla Foundations Firefox. As its YouTube video site expands, Google also conceivably could clash with Apples iTunes store.
The shareholder who asked Schmidt to quit Apples board during Googles annual meeting thinks the interlocking board relationships eventually will cause headaches for Google.
“There is no reason for it because it isnt adding any value for shareholders,” said Brandon Rees, a representative for the AFL-CIOs holdings in Google. “There is really nothing to gain and a lot to lose. We dont want Google to become an antitrust devil like Microsoft did.”
Schmidt scoffed at a similar analogy during his session with reporters, asserting “there is no comparison” between Googles behavior and Microsofts attempts to stifle competition in the computer software market during the 1990s. Microsofts tactics eventually triggered an antitrust battle that forced the software maker to change its ways.
Still, the FTC inquiry is one of several signs that the government is taking a closer look at Google and its increasing dominance in Internet search and advertising. Last year Google scrapped a proposed Internet advertising partnership with Yahoo Inc. to avoid a legal battle with the U.S. Justice Department.
Before retreating, Schmidt had repeatedly predicted the Yahoo alliance would withstand antitrust scrutiny.
A federal judge in New York recently granted a four-month extension to object to the settlement, setting a new deadline of Sept. 4.
Schmidt predicted the book settlement will lead to a “fundamentally good outcome” by giving more people around the world a better chance to buy and read out-of-print works.
He also said Google understands its more likely to attract government scrutiny because of its dominance of Internet search and its sheer size. By some measures, Google now processes more than 70 percent of U.S. searches, helping it to generate nearly $22 billion in annual revenue.
“Information is incredibly important and we should expect governments around the world to be interested in what we do and hold us to the principles we have articulate,” Schmidt said, referring to Googles corporate motto to “do no evil.”
The Google shareholder meeting was a mostly amiable affair, just like the previous four that the company has held since its August 2004 initial public offering. This year marked the first time that neither of Googles co-founders, Larry Page and Sergey Brin, appeared on stage with Schmidt to take questions. Brin also missed the 2007 meeting because he was getting married then, but Page was on hand.