On Monday, Google CEO Eric Schmidt resigned from Apple’s Board of Directors after serving a three-year term. It’s no coincidence that his resignation comes a few days after the Federal Communications Commission (FCC) issued letters to Google, Apple, and AT&T asking why Apple denied the Google Voice application from the iPhone App Store.
On Tuesday, Apple broke the news: “Unfortunately, as Google enters more of Apple’s core businesses, with Android and now Chrome OS, Eric’s effectiveness as an Apple Board member will be significantly diminished since he will have to [remove] himself from even larger proportions of our meetings due to potential conflicts of interest. Therefore, we have mutually decided that now is the right time for Eric to resign his position on Apple’s Board.”
This resignation comes as no surprise to industry analysts who appreciate the candor offered by Apple CEO Steve Jobs in his statement. There is no denying that Google’s expanding business model, specifically into mobile and computer operating systems, are in direct competition with Apple’s core business. The rise in popularity behind Google’s new web browser, Chrome, also must have put Schmidt in a difficult position when discussing advances in Apple’s web browser Safari.
It seems that the happy marriage between Apple and Google is at an impasse. The two companies have competing products in the following areas:
– Web Browsers: Safari (Apple) and Chrome (Google)
– Productivity Software: iWork (Apple) and Google Docs (Google)
– Video Services: iTunes (Apple) and YouTube (Google)
– Mobile Phone Operating Systems: iPhone OS (Apple) and Android (Google)
The Wall Street Journal and Reuters are reporting that the Federal Trade Commission (FTC) will continue its exploration of relationships between Apple and Google even after the announcement of Schmidt’s resignation. The inquiry is a result of questions concerning whether Schmidt’s position as a Board member would compromise competition between the two companies. The FTC stated that while it commends Google and Apple for “recognizing that sharing directors raises competitive issues,” it will continue to investigate Board member connections between the two companies. Currently, the former CEO of Genentech, Arthur Levinson, sits on the Boards of both companies.
Schmidt’s resignation may satisfy the FTC and FCC investigations into the Board of Directors for Apple. The San Francisco Chronicle reported that Tim Bajarin, President of Campbell research firm Creative Strategies Inc., stated that Schmidt leaving the Board will ease the investigation and allow the companies to cooperate more effectively on certain projects.
Apple continues to wade into unfamiliar territory with its public image. It has thrived on the underdog mentality. In addition, its green-friendly good-guys approach to public relations has given Apple the “PC is Evil, Mac is Good” image to consumers. That image may be waning in the face of unending patent infringement lawsuits and FCC/FTC investigations.
Despite the investigations and lawsuits, many feel that Apple won’t take too far of a step backwards in public perception. The Schmidt resignation signals a pre-emptive move by Apple to ensure that the investigation goes smoothly and quickly. With the release of the new iPhone, new operating system in Snow Leopard, and a rumored new tablet computer, Apple must maintain its positive PR aura.