Google Inc. (GOOG) Chief Executive Eric Schmidt, who brought adult supervision to the search company during its period of spectacular growth, has resigned from the board of Apple Inc. (AAPL), a sign of the growing competition between the two tech giants.
The move is hardly a surprise given the overlap between the two companies.
"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," said CEO Steve Jobs in a press release. "Therefore, we have mutually decided that now is the right time for Eric to resign his position on Apple's Board."
Schmidt, who had been on Apple's board since August 2006, probably did not put up much of a fight. Besides, the affable Google chief would no doubt prefer not to lock horns with the mercurial Jobs.
There are deeper issues surrounding the story. The FCC is now investigating Apple's rejection of Google's Voice app from the iPhone App Store. Some writers are criticizing Apple for its control over what apps can go on the iPhone, accusing Apple of monopoly practices that harm iPhone users. As TechCrunch notes, at stake here is the much bigger question of open access to wireless networks. Like all hardware makers and network operators, Apple and AT&T (T) run a closed system, something that Google has vocally opposed in the past.
The conflict over iPhone apps represents a change of tone between the two tech behemoths. Schmidt clearly was jazzed about being associated with Apple. When he was appointed to the board, he said, "I'm really looking forward to working with Steve and Apple's board to help with all of the amazing things Apple is doing."
As recently as July 31, Schmidt did not think there was a conflict of interest from his work with both companies. He told California's Mercury News that Apple and Google have a lot of technical partnerships. Google's Chrome and Apple's Safari have the same technical underpinnings.
"There are significant benefits to Apple and to Google for me to be on both boards with the caveat that you . . . have to be very careful," Schmidt told the paper.
Looks like being careful now requires that Schmidt step down.
Shares of both companies were trading up in early trading.
Reading a Stock Quote
Learn to read the ingredients of a stock.View Course »