FTC INVESTIGATING GOOGLE, APPLE

On May 5, it was reported by various news sources that the Federal Trade Commission opened an investigation into whether an overlap of directors on the boards of Apple Inc. and Google Inc. violates the antitrust laws, Google Chief Executive Eric Schmidt sits on the board of Apple. If directors sit on the boards of two competing companies and their presence could reduce competition, the FTC could take action to prohibit the activity.

The issue is rarely pursued by regulators, in part, because it is difficult to prove the impact of the overlapping directors. It is also relatively easy to remedy the competitive problem by simply resigning from the board of the competitor. Google and Apple known for dominating different sectors are now competing in more areas. For example, both develop software for mobile phones. They also offer competing Web browsers, and are both major players in Internet video, through Google’s YouTube site and Apple’s iTunes online store. Accordingly, the FTC is scrutinizing Mr. Schmidt’s position on Apple’s board and other interlocking directors.

Andre Barlow
(202) 589-1834
abarlow@dbmlawgroup.com