Feds Probe Eric Schmidt

Google just can't seem to get out of the feds' spotlight. Last year's proposed ad arrangement with Yahoo first attracted concerns that Google was dangerously close to assembling an unbreakable monopoly on search ads, and since then, the federal government has been scrutinizing the company's operations more and more. Take the latest news: according to the New York Times, the Federal Trade Commission is now probing whether Google CEO Eric Schmidt's seat on the Apple board of directors violates federal law.

At issue is the Clayton Act, a rarely-invoked statute that bans people from sitting on the boards of two companies that directly compete with one another. It's rarely invoked because guys like Schmidt sit on multiple boards all the time, and often these companies don't compete with one another so directly that competition is adversely affected. In the tech world, these overlapping loyalties are almost inevitable; as the Times points out, Google and Apple both compete against one another and do business with one another constantly.

But as Google tries to expand its revenue sources, this laissez-faire attitude is about to end. In order for the Clayton Act to take effect, the markets in which the two companies directly compete has to account for more than two percent of the firms' total sales. Google's Internet browser Chrome directly competes with Apple's Safari, and Android is not only powering rivals to the iPhone, but will inevitably power cheap netbooks that will go head to head with Apple's laptops. As Google's market share in such products grows, Schmidt's seat on Apple looks more and more illegal.

This may look like Eric Schmidt's efforts to court Barack Obama during the election came to nothing; honestly, what does an endorsement from one of the most powerful CEOs in the world pay back, if not a little suspension of federal law? But as PC World writer Brendon Slattery points out, this new investigation will probably amount to nothing in the end. "Let's say Google and Apple are busted," he writes. "What's the worst that could happen? Eric Schmidt ... will quietly resign from one of the conflicting boards, and then the problem goes away." That's just the cost of doing business. In fact, it's an inadvertent acknowledgement that Google has made considerable inroads in both Internet browsers and smartphones. There's nothing like a federal investigation to tell the world you've officially arrived on the scene.