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Last updated: August 3, 2009 9:05 pm
The close personal link that sealed an unusual alliance between Silicon Valley’s two most prominent companies was broken on Monday as competitive conflicts forced Eric Schmidt, Google chief executive , to step down from his controversial position as a director of Apple.
Mr Schmidt’s departure comes three months after the US Federal Trade Commission started an investigation into multiple directorships, and days after the US Federal Communications Commission launched a review of its own into why Apple had blocked a Google application from working on its iPhone.
Two people familiar with the situation denied the decision was linked to growing regulatory scrutiny of relations between the companies, or to any falling-out between Mr Schmidt and Steve Jobs, Apple’s chief executive, as competitive tensions have grown.
Google has stepped up its presence in software for mobile phones and personal computers in the past two years as it has tried to counter Microsoft, most recently with its announcement last month of the Chrome operating system. That push into “client” software, which includes the Android mobile platform and Chrome web browser, has also brought it into direct competition with Apple.
Mr Jobs said Mr Schmidt’s departure had been “mutually decided”, adding: “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 recuse himself from even larger portions of our meetings due to potential conflicts of interest.”
The companies were set on a collision course even before Mr Schmidt joined the Apple board in August 2006. Charles Elson, professor of corporate governance at the University of Delaware, questioned Mr Schmidt’s decision to become an Apple director given the strong likelihood they would become rivals.
Google began work on Android in 2005, setting up a conflict with the iPhone, which was announced by Apple barely four months after Mr Schmidt became a director. That competition prompted Mr Schmidt to leave the room at Apple board meetings where mobile strategy was discussed, though he continued to take part in other strategic dialogues.
Also, Google had toyed with the idea of launching its own internet browser long before it unveiled Chrome last year, setting it against Apple’s Safari. Art Levinson, another Google director, will continue to sit on the Apple board. One person familiar with the companies’ thinking said that, since he was only a non-executive, Mr Levinson’s involvement in both boards “passed the sniff test”.
In a further sign of their diverging interests, Google said last week that its Google Voice application had been barred from the iPhone. The application, which gives users a single number to use with all their phones, is seen as a potential competitor to some services offered by AT&T, the mobile operator that has exclusive rights to the iPhone in the US.
Although it has only now come to light, the decision to bar Google Voice was taken some weeks ago and was not the cause of any immediate deterioration in relations between the companies, according a person familiar with the development.
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