NQ Logic

Technology | Strategy | Consulting

FTC Strikes Back

It all started six months ago in the midst of the downturn, and finally we have a blessed closure this week with the second resignation of a widely respected Dr. of a large multinational company.

In May 2009, the Federal Trade Commission (FTC) began an inquiry on the close links between Google and Apple boards.

By August, most certainly briefed by Paul S. Otellini (Intel’s CEO and also Google board member) on how much impact on any company and how costly it could be to stand in the middle of road when antitrust regulators decide to cross over Dr. Eric Schmidt (Google CEO/Chairman) resigned from Apple’s board in August this year.

Earlier this month, Dr. Schmidt insisted that Dr. Levinson (arguably Silicon Valley’s most influential player and a board member of both Apple and Google) should remain on Google’s board stating that the revenue that Apple and Google generate from the competing products was below a legal threshold (less than 2%), but it could not last long.

After some tremendous pressures from both internal and external, the FTC and the technology industry, the second act closed this week with Dr. Levinson resigning from the Google board leaving not only a envious seat behind him but also a positive track record applauded by many. Dr. Levinson admitted that FTC inquiries forced him to leave the Google adventure against his wish.

Some journalists and analysts would want to argue why Dr. Levinson chose Apple over Google (In 2008 alone, he earned three times as much (over $500,000 more) from Apple as Google), some others would look into the origin of the sin and would want to regulate before the regulators to avoid affluent executives to be members of competing companies (ecosystem collusion?), though I would rather focus on the consequences of these two resignations.

This story is unique with large impacts in the years to come across multiple technology dimensions, because:
  1. Both resignations are pre-emptive decisions, before any harmful financial impact and fines were applied

  2. FTC has still a large influence, and makes things happen fast in the technology industry in the USA (less than 6 months in fact)
  3. Google is moving aggressively in the mobile space at full speed (Android Vs. iPhone)
  4. Web browsing is a new big entry game (Chrome Vs. Safari)
  5. Apple is not going to let go its cloud computing business on the side (Apple is planning about 500,000 square feet of data center space)
  6. The online distribution of content will still be at the heart of the web business (iTunes Vs. Youtube)
  7. Photo editing will not be Apple's solely (Picasa Vs. Aperture)

Google and Apple are now officially competing in a large number of areas, including web browsers, mobile phone, photo-editing services and the online distribution of music and videos. Google has a freemium approach base on advertising and open standard rather than Apple has a premium approach base on slick design and closed standard.

Even though two other Apple directors (former Vice President Al Gore and Bill Campbell, chairman of Intuit) remain advisers to Google, the board game seems to be finished ... at least for now.

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