Schmidt stepped down from Apples board yesterday as the U.S. Federal Trade Commission investigated whether Google and Apple were breaking antitrust law by sharing board members. The Justice Department also is probing Silicon Valley companies, looking at whether theyre colluding in hiring, two people familiar with the investigation said in June.
Schmidts decision may be a symptom of broader pressure, said Samuel Miller, an antitrust lawyer at Sidley Austin LLP in San Francisco. Googles Android phone software and Chrome operating system are becoming direct competitors to Apples products, increasing scrutiny of the companies.
“This is just one piece of a bigger puzzle, but it clearly reflects increased focus on technology companies by the antitrust authorities,” said Miller, who represented the Justice Department in a monopoly case against Microsoft Corp. in 1994. “It reflects recognition both in Washington and in Silicon Valley that the antitrust laws need to be followed.”
In announcing the resignation yesterday, Apple CEO Steve Jobs cited Schmidts potential for conflicts of interest. The decision was mutual, Jobs said. Steve Dowling, a spokesman for the company, had no additional comment beyond the statement.
“Weve agreed it makes sense for me to step down now,” Schmidt said yesterday in a statement. Matt Furman, a spokesman for Google, declined to comment on the FTCs investigation.
About-Face
Schmidts decision to leave Apple is a reversal from three months ago, when he said the idea of resigning hadnt even crossed his mind.
The Federal Trade Commission said yesterday it would continue the probe. While Schmidts move may soothe the concerns, another board member — Genentech Inc. Chairman Art Levinson — serves on the boards of both Google and Apple.
Googles board also includes Paul Otellini, CEO of Intel Corp., the worlds biggest chipmaker. Apples board, meanwhile, includes Intuit Inc. Chairman Bill Campbell. He also serves as an adviser to Google. Campbell didnt respond to a request for comment. Intel spokesman Chuck Mulloy declined to comment.
Levinson, 59, has been at Google since 2004 and at Apple since 2000. He declined to comment as well, Genentech spokesman Geoff Teeter said.
Two Masters
The departure of Schmidt, 54, was probably seen as the quickest way to resolve the matter, said Greg Neppl, an antitrust lawyer at Foley & Lardner LLP in Washington.
“The inquiry by itself probably motivated the decision,” said Neppl, a former trial attorney with the Justice Departments Antitrust Division. “This kind of government investigation is not the kind of hassle that any business wants to endure.”
Schmidts decision spotlights the Obama administrations scrutiny of Google and its peers. Google, the most popular Internet search engine, is attracting attention for its dominant share of Internet searches and its efforts to expand into other markets, such as operating software for computers and mobile phones.
New Problems
“These problems would not have emerged a couple of years ago because Google was so unidimensional,” said Joe Angland, an antitrust lawyer at White & Case LLP in New York, who has defended DaimlerChrysler Corp. and others in antitrust cases. “Google was great at what it did, but it didnt do that many things.”
Technology companies also had freer rein under the previous administration, said Miller, who isnt involved in any of the investigations.
“There had been lax antitrust enforcement under the Bush administration and a more hands-off attitude,” he said. “The new head of the FTC and the new head of the antitrust division clearly announced there was going to be increased antitrust enforcement and I think that this is the first example of that.”