Levinsons resignation, announced by Google this morning, staved off the threat of a Federal Trade Commission lawsuit. Google Chief Executive Officer Eric Schmidt stepped down from Apples board in August. Having the two men serve on both boards had raised antitrust concerns at the FTC because the companies increasingly compete in the same markets.
“The investigation is over,” FTC Chairman Jonathan Leibowitz said in an interview. “This allows the companies to move on and do what they do best, which is to make better products.”
Google and Apple have expanded into each others turf over the past two years. Both companies offer mobile-phone software and Internet browsers, and Google is developing an operating system for personal computers. When Apple announced Schmidts resignation, the company said conflicts of interest would have forced him to recuse himself from more meetings. Even so, the companies arent direct competitors, Schmidt said this month.
The FTCs scrutiny of Googles board may be meant to send the message that its cracking down on anticompetitive practices, said James Friedland, a Cowen & Co. analyst in New York.
Warning Shot
“Its almost like firing a warning shot to say, Hey, were watching,” said Friedland, who rates Google “outperform” and doesnt own the shares.
The FTC, which disclosed the Google-Apple review in August, declined to comment on any other probes. “I dont comment on investigations,” Leibowitz said.
Levinson, 59, joined Googles board in April 2004. He has served as a director at Apple, the maker of the iPhone and Macintosh computers, since 2000. Googles statement today didnt give a reason why Levinson resigned.
Matt Furman, a spokesman for Mountain View, California- based Google, declined to comment beyond the statement. Katie Cotton, a spokeswoman for Apple, said Levinson is an “excellent” director, declining to comment further.
“No one who is busy running a business wants the distraction of an FTC investigation into overlapping board members, whether or not theres a violation,” said Greg Neppl, an antitrust attorney at Foley & Lardner in Washington. “The investigation itself becomes a nuisance.”
Chrome OS
The company also makes Android, a free operating system for phones. Motorola Inc. and Samsung Electronics Co. have announced plans to sell Android-based phones in the coming weeks. Also, Verizon Wireless said this month that it will work with Google to develop Android devices.
Android products compete in the smart-phone market with Apples iPhone. For now, Android doesnt contribute to Googles revenue, Friedland said.
“Android represents an interesting long-term investment for Google, but if Google were to stop investing in Android or shut it down today, there would be no impact at all,” he said.
At an event in Washington earlier this month, Schmidt, 54, said he hoped that Levinson wouldnt have to leave the board of either company.
Apples Board
Levinson is one of Apples two lead directors, along with Intuit Inc. Chairman Bill Campbell. Levinson and Campbell were briefed on the health of Apple CEO Steve Jobs before he had a liver transplant earlier this year, according to a person familiar with the matter. Levinson is chairman of Roche Holding AGs Genentech unit. Geoff Teeter, a Genentech spokesman, didnt immediately respond to a request for Levinsons comment.
Campbell, 69, also serves as an adviser to Google. Campbell didnt respond to an e-mail seeking comment.