Ten years after the pivotal United States v. Microsoft antitrust suit, regulators are putting Google and its boardroom at center stage. In early May, the Federal Trade Commission (FTC) began a speculative investigation into the possibility of an antitrust violation regarding the service of two Google directors—CEO Eric Schmidt and Arthur Levinson, chairman at Genentech—who both also serve as directors at Apple.
The overlapping service of the directors raised a rarely cited provision of the 1914 Clayton Antitrust Act, Section 8, which forbids “interlocking directorates” among companies that share market space on the belief that such an overlap would inhibit competition.
“The standard worry of Section 8,” says Howard University Law Professor Andrew I. Gavil, “is that the common director will gain information from the two rivals and that will become a funnel, which will allow the two companies to combine their strategies.” Gavil and others note that Google and Apple participate in the phone, mobile markets, and web browser markets, and that improper sharing of information could harm competition in these markets.
Schmidt doubts the veracity of any potential allegations, claiming that he excuses himself from discussions of Apple’s iPhone, a product category where Google and Apple compete most closely. “I don’t think Google sees Apple as a primary competitor,” said Schmidt at a May 7 press conference before Google’s annual general meeting. Carr & Ferrell attorney Gary Reback agrees with the CEO’s prognosis. “There isn’t much of a possibility of this particular issue being taken to court. At the very worst, [Schmidt and Levinson] will just have to resign from the Apple board.”