• silicon.com
• Technology
• Mobile

By Seb Janacek, 26 May 2009 14:43

COMMENT

Will regulators come between lovebirds Apple and Google? Seb Janacek examines the couple's fate.

The Federal Trade Commission's decision to investigate the relationship between Apple and Google highlights the closeness between the two - but is unlikely to separate them in any meaningful way.

It's the most recent regulatory attention Google has attracted. The company came under Department of Justice scrutiny for its proposed revenue-sharing advertising deal with Yahoo! for example, and the company chose withdraw from the deal rather than face limitations or further investigation.

The recent FTC investigation stems from legislation - Section 8 of the 1914 Clayton Antitrust Act - which prohibits a person's presence on the board of two rival companies if competition between the two would be reduced as a result.

According to antitrust experts, the legislation has rarely been enforced.

So how competitive are Apple and Google? On first inspection, the link between the two companies appears tenuous. Apple is a computer company, Google is an internet company.

However on closer inspection, they do share quite a lot. For instance, the two directors on their boards.

The first is Arthur Levinson, the chairman and former CEO of biotechnology company Genentech. The other is Google CEO Eric Schmidt.

In addition, Apple and Google have a rich history of collaboration. Both YouTube and Google Maps feature in iPhone and Mac native applications. And Google search is the default search option in Apple's web browser Safari.

But the two companies also have competing browsers and increasingly could be set to fight each other in the operating system market. Mac OS X has grown its market share with years of impressive quarterly growth while Google's mobile OS Android is threatening to break out from the smartphone space and into the desktop/notebook arena. Reports abound about how easy it is to configure Android to run on netbooks.

And it's the mobile phone market - where Android devices go head to head with the iPhone - where the most crossover exists.

Eric Schimdt says he excuses himself from meetings when Apple's iPhone strategy is discussed. Given the pre-eminence of the iPhone in Apple's strategy, you have to suspect Schmidt has spent a lot of time in the executive lounge drinking decaf and thumbing through interior design magazines.

Together, Google and Apple account for almost 75 per cent of mobile-phone browsing, according to recent data from Net Applications. Of that figure, Apple is by far the dominant player.

Granted, Android is still in its nascent stages while the iPhone is well-established. However, it's likely that the two companies will come into sterner competition with each other as more handsets bearing the Android platform come to market.

Of course the two companies also share a common enemy: Microsoft.

In its most recent antitrust wranglings in Europe, Microsoft cited the threat of Google as a mitigating reason for the regulators to go easy on it. Microsoft argued that if it was forced to unbundle Internet Explorer from Windows, users would flock to Google's Chrome browser instead.

A somewhat weak argument given that users could do that anyway and have largely chosen not to. But it does underline how important Microsoft sees web search and advertising becoming to the tech industry. This was further evidenced by the company's huge takeover bid for Yahoo! in 2008.

If the FTC's investigation is just about formal governance structures then the resignation of one or both of the directors should resolve the issue - and this would seem to be a small matter.

But it points to a special relationship between Apple and Google which is reaping mutual rewards - a relationship which would surely continue even if they no longer shared two directors.