The clock has been running down on the Apple/Google relationship for some time.
Really it came as no surprise that Eric Schmidt left the Apple board given all the attention that it has garnered for months and months. Everyone saw the writing on the wall when the Federal Trades Commission waded in earlier in the year with its plan to probe the relationship and work out what it meant for competition and anti-trust laws.
Mr. Schmidt is a very smart man in charge of a billion-dollar company and I
would hazard a guess that he also saw that things could not go on as
they had, even though he excused himself from board meetings when the
iPhone was discussed.
My betting is he wanted to give up the job on his own terms and when
it suited his agenda and not someone else’s. It is highly unusual for a
director to leave a board before his or her tenure is up.
Back in May, Mr. Schmidt told reporters like myself at a round table
that the question of quitting the board position was not one he had
considered even in light of the government’s interest. I would go out
on a limb and say no-one there really swallowed that line.
So what was the straw that broke the camel’s back? This is pure guesswork I admit, but the timing cannot be ignored.
As I have reported in my main news story,
plenty of people are pointing to the move by the FCC to investigate why
the iPhone app store rejected Google’s mobile application.
It will certainly be interesting to see how deep that inquiry will
be given the dissatisfaction by a number of developers who get rejected
and are given no clear idea why.
As regards the Apple/Google affair, the FTC has since come out and
said its investigation of the overlapping directorship issue will
continue, perhaps proving that had Mr. Schmidt resigned earlier this
would have been one less regulatory probe the company could have
John Simpson at the Consumer Watchdog, a non-profit organisation,
has applauded Mr. Schmidt’s move but at the same time criticised the
"clubby atmosphere" that prevails in Silicon Valley where everyone
seems to be on one another’s board.
I don’t doubt that this happens in other sectors, like say banking.
But it is worth noting that there is a new sheriff in town and
regulators are taking a tough line with what is going on in Silicon
Jo-Ellen Pozner, who is an assistant professor of organisational
behaviour at UC Berkeley’s Haas School of Business, said that because
the technology industry is so all-pervasive in our lives and in
society, she would not be surprised by even further regulatory scrutiny.
Her advice is for the industry to get out ahead of the issue and be
seen to be taking such issues seriously and only cleave to those
directors you really need.
"If the industry regulates itself, it can forestall any scrutiny from investors and regulators."
If only Google and Apple had acted sooner, this might have been one headache it wouldn’t have had to worry about.