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Hot Apple Turnover, Hold the Google

By Neetal Parekh on August 06, 2009 | Last updated on March 21, 2019

In an interesting, but not shocking, corporate governance development, Google CEO Eric Schmidt announced  this week that he is stepping down as a director of Apple's eight-member board.  It is not merely coincidence that the news follows Google's June announcement of the company's development of ChromeOS--a laptop operating system--edging it closer to Apple's core business of laptop and desktop technology.  In fact, the Federal Trade Commission (FTC) has already raised an eyebrow at the inter-corporate nature of the board and any potential consequences of limiting competition.

Though Schmidt's departure detaches him from Apple's board after a three-year tenure, Google is still a part of the Apple pie, if by association.  Genentech CEO Arthur Levinson remains on the boards of both companies.

The Silicon Valley inter-company directorate hand-holding has caught the eye of FTC Director Richard Feinstein, who issued a statement affirming the FTC's commitment to continue the probe.  Though "commending" Google and Apple "for recognizing that sharing directors raises competitive issues...[the FTC] will continue to investigate remaining interlocking directorates between the companies," Feinstein announced Monday.

It is not the first time Eric Schmidt has had to negotiate his relationship on Apple's board.  He recused himself from iPhone discussions since Google was developing mobile phone technology that would compete with Apple's iPhone.

The lines between collaboration, competition, and collusion are becoming decidedly grey in the tech sphere where social media and dynamic exchange form the quid pro quo of operation.  So in-house counsel departments should be ready...as companies, CEOs, and directors will increasingly rely on their legal teams' knowledge and understanding of corporate associations to ensure compliance with trade and ethics laws.

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