05 May 2009

Bad board members, bad

Rico says that MarketWatch has the heinous news about the overlapping boards at Apple and Google:
Federal regulators reportedly are examining the role of two directors who sit on the boards of both Apple Inc. and Google Inc. under an antitrust law meant to ensure companies don't collude to block competition. The Federal Trade Commission is looking at whether the two high-tech giants are violating the 1914 Clayton Antitrust Act, which bars directors from serving on two competing companies, according to The Wall Street Journal.
Eric Schmidt, chief executive of Google, and Arthur Levinson, former CEO of Genentech, are board members at both Google and Apple. Although the two companies do not compete head to head in any market, they could soon be rivals in the mobile-phone business.
Apple is the maker of the popular iPhone, but Google has built an operating system designed for mobile phones that handset makers such as Motorola Inc. plan to use in their wireless devices. The Google operating system, named Android, could be a selling point for consumers who want a phone with similar capabilities as the iPhone but at a lower cost. Google, however, does not plan to produce its own phone like Apple does. If the FTC found the two companies in violation of the Clayton act, the typical remedy is for the directors to resign from one of the boards. Yet the law is seldom invoked and difficult to enforce unless companies are clearly shown to be in direct competition.
Rico says this is really bottom-fishing by the FTC; surely, in this business environment, there are bigger problems out there...

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