SAN FRANCISCO, CA - The Federal Trade Commission (FTC) is investigating Apple and Google for possible anti-trust violations.
According to the New York Times, the investigation is believed to center on the close ties between the boards of the two companies. Under the Clayton Antitrust Act of 1914, directors are forbidden from sitting on the board of two companies where that would reduce competition. It's a rarely enforced ruling, and where it does become an issue the norm is for the director concerned to resign from one of the boards.
Apple and Google share two directors - Eric Schmidt and Arthur Levinson, former chief executive of Genentech. Between them, the other Google directors hold plenty of board positions elsewhere too - one Google director is Intel CEO Paul Otellini, and another is L John Doerr, who is also on the board of Amazon.
While the two companies cooperate in many areas, they do also compete, especially in the cellphone and operating systems markets. Google has said that Schmidt recuses himself when the Apple board is discussing mobile phones, but this appears not to be enough for the FTC.
The move shows that Google's closeness to the Obama administration doesn't win it any special favours. Schmidt campaigned for Obama before the election, and has recently been appointed to his advisory council on science and technology.
But this is the second anti-trust investigation to hit Google within a week. Last week, the Department of Justice began its own inquiry into the company's plans to digitise millions of books and make them available online. Last year, too, the Justice Department said it would attempt to block Google's planned search advertising deal with Yahoo.
All involved are keeping quiet about the report.