Eric Schmidt in the Hot Seat

Google (GOOG) has been working overtime to dispel the notion that it's a monopoly. And with good reason; its power and ubiquity have led the Justice Department's antitrust lawyers to scrutinize its every move in search of signs that the company is abusing its marketplace position. Two months ago, for example, the feds launched an investigation into whether Eric Schmidt's seat on the Apple (AAPL) board of directors violates the Clayton Act, which bans executives of companies in direct competition from sitting on one another's boards.

At the time, Google and Apple directly competed when it came to Web browsers (Safari vs. Chrome) and smartphones (iPhone vs. Gphone). Schmidt swore that he would recuse himself from any board discussions about said products, a promise that seemed to mollify many observers at the time. But now that Google has announced plans to launch its own operating system, Apple's most important product—the Apple OS X—will directly compete with Google. Around the country, critics are beginning to say that this is too much. It's time, they say, for Schmidt to walk away from Apple and let the market do what it's supposed to.

Here's Motley Fool's Anders Bylund, for example. "There's nothing wrong with cross-pollination within the IT industry, or any other sector, for that matter. ... But you can take it too far, and that's what's happening in Cupertino. Schmidt can advise Apple on iPod strategy now, I guess. Maybe he can talk strictly about the hardware side of the Mac business, too. Pretty much everything else seems to be off limits. It's time to step down."

And here's CNet's Tom Krazit: "Dear Eric Schmidt: It's time for you to go. ... It was pretty clear before, but now it's completely obvious: you are overseeing two companies on a collision course. How can you possibly claim that you're guiding the best interests of each company when the best interest of each company in two years will be to out-maneuver the other?"

Maybe Schmidt is feeling the heat. Or maybe he already knew that with the new operating system, his role on Apple's board would look increasingly illegal. Whatever the case, Schmidt appeared yesterday at the Allen & Co. media conference and declared that he would begin talking to his Apple colleagues about whether it's time for him so leave the board. "I'll talk to the Apple people," he said, according to Reuters. "At the moment, there's no change."

We'll see how long that lasts.