FTC investigates Apple, Google ties

The U.S. Federal Trade Commission is carrying out a probe into the boards of Apple and Google to see if the two companies are breaking anti-trust rules.

The FTC is looking at the members of the board in Apple and Google to see if the appointments breach the Clayton Antitrust Act of 1914, which prohibits someone being on the board of two rival companies when it would reduce competition.

Eric Schmidt, chief executive of Google, and Arthur Levinson, former chief executive of Genentech, are on the board of both companies and with Google and Apple competing in the mobile phone and browser sectors the FTC has concerns the New York Times reports.

“Government actions under Section 8 are rare, but they are brought under circumstances when the presence of a common director on competing boards is likely to be anticompetitive,” said Andrew I. Gavil, an antitrust expert and a professor at the Howard University School of Law.

Apple has in the past said that Schmidt recuses himself from board meetings whenever Apple’s phone business is discussed but this may not be enough for the regulators. However, a large fine is unlikely if the FTC rules against the companies on the matter, since in the past executives simply stand down from the board

The move adds more pressure on Google, which the new Assistant Attorney General for Antitrust at the United States Department of Justice Christine Varney has said is an effective monopoly.

“I expect the administration to be aggressive, generally, on antitrust enforcement,” said Sanford Litvack, a partner at Hogan & Hartson, who worked to block the Google/Yahoo deal.

“I don’t expect Google to either be singled out or to receive a free pass because of Schmidt’s relationship with the administration,” he said.