FTC investigating antitrust ties between Apple, Google

[AppleInsider]

The US Federal Trade Commission is examining the relationship between Apple and Google to determine if the companies are violating antitrust law.

A report by the New York Times explained that the investigation centers on the Section 8 provision of The Clayton Antitrust Act of 1914, which forbids "interlocking directorates," a situation where directors serve on the boards of two competing companies.

Eric Schmidt, the chief executive of Google, and Arthur Levinson, the former chief executive of Genentech, serve on the boards of both Apple and Google. If the FTC were to take action in the matter, the largest consequence would call for the two members to resign from their duties as directors for one of the two companies. Antitrust experts cited by Times stated that "investigations of interlocking directorates rarely lead to major confrontations between companies and the government."

The article cited Andrew I. Gavil, an antitrust expert and a professor at the Howard University School of Law, who said, "Government actions under Section 8 are rare, but they are brought under circumstances when the presence of a common director on competing boards is likely to be anticompetitive.”

Apple and Google both collaborate and compete, although their competing products are rarely aimed at the same customers. Both companies produce web browsers and smartphone software, but in both cases Google aims its offerings at competing against the encroachment of Microsoft into its advertising business, with the Google Chrome browser positioned to replace Internet Explorer and the Android phone platform targeted directly at Microsoft's Windows Mobile efforts.

Google also largely finances the development of Mozilla Foundation's Firefox browser, but neither Firefox nor Chrome are direct competitors to Apple's Safari browser, and describing the web browsers as a competitive market is a difficult stretch because all of the produts are offered for free.

Similarly, while pundits have bent backwards to position the Android G1 as an iPhone killer, it has done nothing to impact iPhone sales and appears to be aimed at a very different hobbyist audience compared to Apple's consumer-centric iPhone. Even so, Google's Schmidt regularly recuses himself from Apple's board meetings when the company discusses the strategy related to the iPhone.

Other areas where Apple and Google compete include photo editing software, with Apple's iPhoto recently being joined by Google's Picassa on the Mac platform. There is also some overlap between Google's YouTube service and Apple's iTunes Store, and the two companies sell competing cloud services, with Google offering online disk storage, calendar, and email services that compare with Apple's MobileMe services.

Google also has plans to push Android into netbooks and other mobile devices where it could serve as competition for Apple's iPod touch and the forthcoming tablet devices the company is believed to have in its product pipeline, as well as lower cost notebook Macs. Were the Android market to develop significantly, it would also begin to compete against Apple's Cocoa Touch platform for mobile software development and its iPhone App Store for mobile software sales.

The Times reported that the recently confirmed head of the US Justice Department's antitrust division, Christine A. Varney, last year singled Google out as a potential antitrust concern because of the company's powerful lock on Internet search and advertising.

However, Apple has shown no interest in entering the search or advertising markets, shunning ad-supported services shortly after a brief experiment with advertising within the now discontinued Sherlock, an Internet channel search technology Apple abandoned earlier in the decade to focus on local desktop search under the name Spotlight.

Government efforts to impede Google's search business might likely result in handing rival Microsoft a leg up in the market it has been unable to enter successfully on its own. Such a move would be bitterly ironic after the timid efforts to investigate Microsoft's antitrust violations in the 1990's, including the company's violation of its consent decree, were completely dismissed under the then new Bush Administration nearly a decade ago.

After it became clear that the government would not act to redress Microsoft's illegal business practices, Apple, Google, and other companies began working together to develop a competitive front to rival the Windows juggernaut. Apple successfully ran circles around Windows development on the desktop and obliterated Microsoft's efforts to compete with Windows Media and in consumer media players with the iPod, iTunes and QuickTime, while Google funded the development of Firefox as an alternative to Internet Explorer and gave Microsoft no easy entry into its search and advertising business; both companies have also executed plans to devastate Windows Mobile in the smartphone arena.

Apple and Google have vested interests in continuing to cooperate against Microsoft whether or not the FTC forces changes to their boards memberships. Apple relies on Google to provide a variety of information services on the Mac, Apple TV, and iPhone, including maps, search, and expanding efforts in YouTube integration.

Google links to Apple's QuickTime movie trailers in its search results, and modified its YouTube service to use H.264 entirely to support Apple's products. Apple is also incorporating expanded support for Google Calendar, YouTube and other services in Mac OS X Snow Leopard.

Even in areas where the two companies offer competing products, there are many collaborations in using open technologies; both use the open WebKit engine to power their web browsers and the open XMPP/Jabber technology in their instant messaging products, for example.

[randythot]

Sounds like someone put the FTC up to this? I imagine Apple has extensive notes to document when Schmidt steps out during Apple board meetings. Although there are areas they might overlap and compete (Android, mainly?), I can imagine that Apple and Google want to maintain their relationship, so others may want to cause a rift.

[solipsism]

Originally Posted by randythot

Sounds like someone put the FTC up to this? I imagine Apple has extensive notes to document when Schmidt steps out during Apple board meetings. Although there are areas they might overlap and compete (Android, mainly?), I can imagine that Apple and Google want to maintain their relationship, so others may want to cause a rift.

It does sound like that, but I think this investigation will be healthy for the two companies especially since Apple and Google will be having even more integration this summer with the 3rd generation iPhone which will reportedly have simple uploading of videos to YouTube built in. By healthy, I figure nothing criminal will come out of this investigation and at most someone will have to step down from the board.

[georgetang]

Then, please investigate AT&T and Apple.

I want to see the government break down that exclusivity.

Just like what they did with Microsoft, prohibiting OEM to build and offer configure solution with other OS rather than Windows.

I believe by opening Apple's iPhone would force AT&T to actually improve the sucking and expensive service by actual improve "real coverage" and "no drop calls" than "more bar in more places" when their "more bars" doesn't actually mean "better coverage" and/or "no drop calls"...

And by opening, AT&T would actually lower their rate...

[melgross]

Ah, the two companies should just merge already and get it over with.

[fraklinc]

They should investigate M$ft cause everytime i try to use Live Search it only shows me results from Microsoft and it's Partners and never gives me what am really looking for. I agree that they got to make money but damn live search has become useless.

[solipsism]

Originally Posted by melgross

Ah, the two companies should just merge already and get it over with.

Would that even be allowed when each are dominate in many respective areas of computing?

[solipsism]

Originally Posted by fraklinc

They should investigate M$ft cause everytime i try to use Live Search it only shows me results from Microsoft and it's Partners and never gives me what am really looking for. I agree that they got to make money but damn live search has become useless.

I don't think for a second that you use Live Search.

[melgross]

Originally Posted by solipsism

Would that even be allowed when each are dominate in many respective areas of computing?

As long as they aren't dominant in the same areas, it's fine.

[Adjei]

Originally Posted by georgetang

Then, please investigate AT&T and Apple.

I want to see the government break down that exclusivity.

Just like what they did with Microsoft, prohibiting OEM to build and offer configure solution with other OS rather than Windows.

I believe by opening Apple's iPhone would force AT&T to actually improve the sucking and expensive service by actual improve "real coverage" and "no drop calls" than "more bar in more places" when their "more bars" doesn't actually mean "better coverage" and/or "no drop calls"...

And by opening, AT&T would actually lower their rate...

Damn is it only Apple that has a phone exclusive to a carrier, people are acting like something that has never happened before.

[solipsism]

Originally Posted by Adjei

Damn is it only Apple that has a phone exclusive to a carrier, people are acting like something that has never happened before.

It's crazy! On top of that, it's never people from countries that are all GSM that are complaining about these exclusivity contracts, only AT&T, where the iPhone 3G still wouldn't work on Sprint, Verizon or T-Mobile.

[melgross]

Originally Posted by solipsism

It's crazy! On top of that, it's never people from countries that are all GSM that are complaining about these exclusivity contracts, only AT&T, where the iPhone 3G still wouldn't work on Sprint, Verizon or T-Mobile.

It's amazing how some people forget that, isn't it?

[overdue]

You guys need better consumer activism over there! Take to the streets, no seriously! Here in France we fought and won to end the exclusive partnership between Apple and the carrier Orange. Now all three carriers can sell the iPhone. It took about year to make it happen.

[solipsism]

Originally Posted by overdue

You guys need better consumer activism over there! Take to the streets, no seriously! Here in France we fought and won to end the exclusive partnership between Apple and the carrier Orange. Now all three carriers can sell the iPhone. It took about year to make it happen.

I don't exactly agree with many of France's consumer laws, but what are the details of the win. I was under the impression that the iPhone cost with other carriers is prohibitively expensive which pretty much makes the option pointless unless you want to fork out a lot for an unsubsidized, unlocked iPhone.

[melgross]

Originally Posted by overdue

You guys need better consumer activism over there! Take to the streets, no seriously! Here in France we fought and won to end the exclusive partnership between Apple and the carrier Orange. Now all three carriers can sell the iPhone. It took about year to make it happen.

It doesn't matter. Haven't you read what we posted?

It won't work on the other carriers. The only point to opening up the phone in the US previously, was so that people could buy it and take it abroad to another country where it WOULD work. Get it?

[mdriftmeyer]

Originally Posted by melgross

Ah, the two companies should just merge already and get it over with.

Hell no. That would never happen and would be the dumbest action ever.

[melgross]

Originally Posted by mdriftmeyer

Hell no. That would never happen and would be the dumbest action ever.

I disagree. I think it would be brilliant!

[Fairly]

Dilbert! Good to see you back! I was worried about you there for a while. Another pathetic article as always. When are people going to realise you're out of your mind? This isn't news - this is Dilbert's world falling apart again!

[DHKOsta]

Originally Posted by melgross

It doesn't matter. Haven't you read what we posted?

It won't work on the other carriers. The only point to opening up the phone in the US previously, was so that people could buy it and take it abroad to another country where it WOULD work. Get it?

I'm mostly in agreement with you, however...

It would work on T-Mobile, but the iPhone's antenna configuration is such that It couldn't take advantage of their WCDMA 1700 solution for metro data traffic. I have a feeling that if the phone was unlocked in the US, people would quickly realize how "not-so-bad" AT&T's service is.

And if Apple produced a CDMA iPhone as well, heat and battery life would become almost unbearable issues. People keep whining about wanting an iPhone on Verizon, but they don't understand how much the quality of the experience would lessen on a CDMA model.

[8CoreWhore]

Originally Posted by overdue

You guys need better consumer activism over there! Take to the streets, no seriously! Here in France we fought and won to end the exclusive partnership between Apple and the carrier Orange. Now all three carriers can sell the iPhone. It took about year to make it happen.

Unfortunately, in the US there are only two providers with GSM; AT&T and T-Mobile. And, these two use two different frequencies. In order for the Govt to force Apple to give us a choice, they'd have to force Apple to change the internal technology. It may be possible for Apple to easily have more frequencies accommodated in the phone, so all one would have to do is switch providers - but even this is a non-solution as T-Mobile barely has a 3G network in the US!

[solipsism]

Originally Posted by DHKOsta

I'm mostly in agreement with you, however...

It would work on T-Mobile, but the iPhone's antenna configuration is such that It couldn't take advantage of their WCDMA 1700 solution for metro data traffic. I have a feeling that if the phone was unlocked in the US, people would quickly realize how "not-so-bad" AT&T's service is.

And if Apple produced a CDMA iPhone as well, heat and battery life would become almost unbearable issues. People keep whining about wanting an iPhone on Verizon, but they don't understand how much the quality of the experience would lessen on a CDMA model.

You'd have an EDGE iPhone with GPS. Not bad, but most people won't go for that. The CDMA iPhone would have the advantages of the better voice quality and better designed standard which allows you to be on 3G while only using power for the 2G CDMA for voice. This should give it a longer time over AT&T's network when you are connected to a 3G network.

But obviously Apple has reasons for the exclusivity. Reasons that far extend the "they had to to get it off the ground argument" as they are still making exclusivity plans with single carriers in countries that are all GSM-based and countries that are so large, like China, that having a CDMA phone to cover nearly a billion potential customers would make sense from a focus of simply selling more units. I think Apple's long game is to maintain the contracts as long as possible so they can maintain control over their ecosystem as long as possible. It does have its advantages.

[iVlad]

Two companies can work together. Wish government just stop with these BS investigations. Investigate Bush's war crimes.

Aggg.

[melgross]

Originally Posted by DHKOsta

I'm mostly in agreement with you, however...

It would work on T-Mobile, but the iPhone's antenna configuration is such that It couldn't take advantage of their WCDMA 1700 solution for metro data traffic. I have a feeling that if the phone was unlocked in the US, people would quickly realize how "not-so-bad" AT&T's service is.

And if Apple produced a CDMA iPhone as well, heat and battery life would become almost unbearable issues. People keep whining about wanting an iPhone on Verizon, but they don't understand how much the quality of the experience would lessen on a CDMA model.

It's not the fault of Apple that T-Mobil chose this weird frequency. It had nothing to do with the iPhone's antenna.

[TenoBell]

Why do people act as though AT&T has outrageously high data prices. Take a look at Verizon.

Originally Posted by georgetang

And by opening, AT&T would actually lower their rate...

[TenoBell]

How is that Apple's fault?

Originally Posted by melgross

It's the fault of Apple that T-Mobiley chose this weird frequency. It had nothing to do with the iPhone's antenna.

[melgross]

Originally Posted by TenoBell

How is that Apple's fault?

Hey! It's late. What do you expect?

I'll change it to what it should have said.

[Sipadan]

Originally Posted by solipsism

I don't exactly agree with many of France's consumer laws, but what are the details of the win. I was under the impression that the iPhone cost with other carriers is prohibitively expensive which pretty much makes the option pointless unless you want to fork out a lot for an unsubsidized, unlocked iPhone.

And you are absolutely correct. Although it does look like a huge win for the consumer, it's only smoke. New carriers' iPhone prices are aligned with Orange, hence there's no real competition whatsoever. French Phone and utilities cos. are notorious for illegal commercial talks to keep prices highest possible and not compete. Most of them have been fined several times, and still it goes on, for the penalties are minimal compared to the yields of such practices... So there for the BIG consumer win in France.

A paper win only good for gloating...

[TenoBell]

I'm in California right now, what're you still doing up this late,

Originally Posted by melgross

Hey! It's late. What do you expect?

I'll change it to what it should have said.

[melgross]

Originally Posted by TenoBell

I'm in California right now, what're you still doing up this late,

Even when I was still working I stayed up late. 4 hours of solid sleep is enough.

Ever since I retired over four years ago, I've been staying up even later.

But 4:00 am is enough. I'm going to bed shortly.

[sapporobabyrtrns]

Originally Posted by solipsism

It's crazy! On top of that, it's never people from countries that are all GSM that are complaining about these exclusivity contracts, only AT&T, where the iPhone 3G still wouldn't work on Sprint, Verizon or T-Mobile.

The operators here in Finland offer exclusive contracts for phones, i.e. "Get a Nokia xxx for xx Euros a month for xx months", but the difference here is that if a person goes for this and decided to pay out the contract sooner than the xx months, the operators will unlock the phones. Some people do this if they want to purchase a phone but do not want pay all the money up front. Exclusive deals are not new, I think it is just the terms of the AT&T (voted crappiest network in the entire known and unknown galaxy), and Apple.

[jfanning]

Originally Posted by solipsism

But obviously Apple has reasons for the exclusivity. Reasons that far extend the "they had to to get it off the ground argument" as they are still making exclusivity plans with single carriers in countries that are all GSM-based and countries that are so large, like China, that having a CDMA phone to cover nearly a billion potential customers would make sense from a focus of simply selling more units. I think Apple's long game is to maintain the contracts as long as possible so they can maintain control over their ecosystem as long as possible. It does have its advantages.

There is not a billion potential customers for the iPhone in China, as most of the population would not be able to afford the iPhone

[noirdesir]

Originally Posted by solipsism

It's crazy! On top of that, it's never people from countries that are all GSM that are complaining about these exclusivity contracts, only AT&T, where the iPhone 3G still wouldn't work on Sprint, Verizon or T-Mobile.

And that is because the U.S. managed to create three incompatible different 3G networks (even though, presumably, phones working both on T-Mobile and AT&T will come out or already have).

[greglo]

Originally Posted by jfanning

There is not a billion potential customers for the iPhone in China, as most of the population would not be able to afford the iPhone

No, but a significant proportion could, and that number is increasing. If they didn't want it why do you think there are so many cheap, dodgy knock-offs??

[sapporobabyrtrns]

Originally Posted by noirdesir

And that is because the U.S. managed to create three incompatible different 3G networks (even though, presumably, phones working both on T-Mobile and AT&T will come out or already have).

It is rather sad that the US has managed to screw up what is supposed to be a global standard.

[sapporobabyrtrns]

Originally Posted by greglo

No, but a significant proportion could, and that number is increasing. If they didn't want it why do you think there are so many cheap, dodgy knock-offs??

Note your own words: "cheap, dodgy knock-offs". If the average Chinese has the option to pay full price for an iPhone or have one that looks very similar and might even have more features for less money, take a guess which one they will go for.

[digitalclips]

Originally Posted by randythot

Sounds like someone put the FTC up to this? I imagine Apple has extensive notes to document when Schmidt steps out during Apple board meetings. Although there are areas they might overlap and compete (Android, mainly?), I can imagine that Apple and Google want to maintain their relationship, so others may want to cause a rift.

What irony in the hypocrisy if it is M$

[Lochias]

Originally Posted by melgross

Ah, the two companies should just merge already and get it over with.

If the Government objects to their talking to each other (at the Board level), how are they going to approve a merger??

[monstrosity]

Originally Posted by melgross

Ah, the two companies should just merge already and get it over with.

that did spring to mind

[Maestro64]

Originally Posted by melgross

It's not the fault of Apple that T-Mobil chose this weird frequency. It had nothing to do with the iPhone's antenna.

GSM phones that work on AT&T also work on T-Mobile...how because most GSM chip set are quad or tri band, which means they can operate on any of the 3 or 4 frequencies that GSM operates on world wide. I have an AT&T phone which I unlocked to work on T-Mobile.

I suspect Apple is also using one of these tri or quad band chips too thus the reason is works all over the world.

Face people CDMA only works in the US and with Verizon and Sprint, and if you wanted a Iphone which work not only in the US but world wild Apple would have to put in two chip set one for CDMA and one for GSM, which as it was pointed out it would chew up more power and put out more heat...

[teckstud]

Originally Posted by solipsism

It's crazy! On top of that, it's never people from countries that are all GSM that are complaining about these exclusivity contracts, only AT&T, where the iPhone 3G still wouldn't work on Sprint, Verizon or T-Mobile.

Here's your answer:

http://gizmodo.com/gadgets/annual-su...eep-329104.php