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April 1, 2010, 2:03 pm F.T.C. Is Said to Have Looked Into Amazon-Google Ties
By MIGUEL HELFT AND BRAD STONE Last month, John Doerr, one of Americaâs most celebrated venture capitalists, announced that he would step down later this year from the board of Amazon.com, a company that he helped to finance and build. At the time, Amazon said Mr. Doerr âhas decided not to stand for re-election and will focus more of his time on new ventures.â
Jonathan Alcorn/Bloomberg John Doerrâs recent departure from the board of Amazon.com was prompted by a federal inquiry into the close ties between Amazon and Google, said people with direct knowledge of the matter.
But people with direct knowledge of the matter now say Mr. Doerrâs decision was prompted by a Federal Trade Commission inquiry into the close ties between Amazon and Google, where Mr. Doerr is also a director. It was not clear whether the commission had begun a preliminary inquiry or a formal investigation, or whether it was still looking into the matter.
Mr. Doerr did not respond to a request for comment. Amazon and Google declined to comment.
This is the second time in a year that the F.T.C. has taken aim at the relationships between Google and its rivals, signaling a more aggressive approach by the agency on antitrust matters. Last year, the commission began an antitrust investigation into the ties between Google and Apple. At the time, even as the rivalry between the companies sharpened, they shared two directors: Eric E. Schmidt, Googleâs chief executive, and Arthur Levinson, the former chief executive of Genentech. Antitrust law generally prohibits rival companies from having âinterlocking directorates.â
The investigation led to the resignations of Mr. Schmidt from the Apple board and Mr. Levinson from the Google board.
Robert Schroeder, the F.T.C.âs regional director in Seattle, where Amazon is based, declined to discuss specific companies but said, âWe have an interest in making sure companies are complying with the Clayton Antitrust Act.â
While Amazon remains primarily an e-commerce company and Google an online advertising giant, competition between the two companies has intensified in recent years. Both companies offer so-called cloud computing services to start-up companies and others.
Whatâs more, the two are quickly becoming rivals in the competitive electronic book market, where Amazon has built a leadership position with the success of its Kindle e-book reader. For its part, Google is trying to make inroads in the business through its book digitization project and book search service. And Amazon went to court to try to block a proposed settlement between Google and groups representing authors and publishers that would pave the way for Google to create the worldâs largest digital bookstore and library. The settlement is awaiting court approval.
If the F.T.C. gets more aggressive on the issue of interlocking boards, it could lead to headaches for more companies in Silicon Valley, where venture capitalists and executives often sit on the boards of companies that are engaged in so-called coopetition, a mix of cooperation and competition.
Some industry insiders say a possible next target may well be the relationship between Google and Intel. Intel, the chip giant, has teamed up with Nokia to build a software platform called MeeGo for cellphones and other computing devices, in competition with Googleâs Android. That could create an awkward situation for Paul S. Otellini, the Intel chief executive, who sits on the board of Google. An Intel spokesman, Chuck Mulloy, declined to comment on what he described as âspeculation.â
While Mr. Otelliniâs position with Google may attract attention, it is not clear that it would be a cause of concern. Under the Clayton Act, interlocking directorates are not considered a problem if the revenue from products in which the companies compete is less than 2 percent of either companyâs sales. Intel had more than $35 billion in net revenue last year, while Googleâs sales were nearly $24 billion.
By MIGUEL HELFT AND BRAD STONE Last month, John Doerr, one of Americaâs most celebrated venture capitalists, announced that he would step down later this year from the board of Amazon.com, a company that he helped to finance and build. At the time, Amazon said Mr. Doerr âhas decided not to stand for re-election and will focus more of his time on new ventures.â
But people with direct knowledge of the matter now say Mr. Doerrâs decision was prompted by a Federal Trade Commission inquiry into the close ties between Amazon and Google, where Mr. Doerr is also a director. It was not clear whether the commission had begun a preliminary inquiry or a formal investigation, or whether it was still looking into the matter.
Mr. Doerr did not respond to a request for comment. Amazon and Google declined to comment.
This is the second time in a year that the F.T.C. has taken aim at the relationships between Google and its rivals, signaling a more aggressive approach by the agency on antitrust matters. Last year, the commission began an antitrust investigation into the ties between Google and Apple. At the time, even as the rivalry between the companies sharpened, they shared two directors: Eric E. Schmidt, Googleâs chief executive, and Arthur Levinson, the former chief executive of Genentech. Antitrust law generally prohibits rival companies from having âinterlocking directorates.â
The investigation led to the resignations of Mr. Schmidt from the Apple board and Mr. Levinson from the Google board.
Robert Schroeder, the F.T.C.âs regional director in Seattle, where Amazon is based, declined to discuss specific companies but said, âWe have an interest in making sure companies are complying with the Clayton Antitrust Act.â
While Amazon remains primarily an e-commerce company and Google an online advertising giant, competition between the two companies has intensified in recent years. Both companies offer so-called cloud computing services to start-up companies and others.
Whatâs more, the two are quickly becoming rivals in the competitive electronic book market, where Amazon has built a leadership position with the success of its Kindle e-book reader. For its part, Google is trying to make inroads in the business through its book digitization project and book search service. And Amazon went to court to try to block a proposed settlement between Google and groups representing authors and publishers that would pave the way for Google to create the worldâs largest digital bookstore and library. The settlement is awaiting court approval.
If the F.T.C. gets more aggressive on the issue of interlocking boards, it could lead to headaches for more companies in Silicon Valley, where venture capitalists and executives often sit on the boards of companies that are engaged in so-called coopetition, a mix of cooperation and competition.
Some industry insiders say a possible next target may well be the relationship between Google and Intel. Intel, the chip giant, has teamed up with Nokia to build a software platform called MeeGo for cellphones and other computing devices, in competition with Googleâs Android. That could create an awkward situation for Paul S. Otellini, the Intel chief executive, who sits on the board of Google. An Intel spokesman, Chuck Mulloy, declined to comment on what he described as âspeculation.â
While Mr. Otelliniâs position with Google may attract attention, it is not clear that it would be a cause of concern. Under the Clayton Act, interlocking directorates are not considered a problem if the revenue from products in which the companies compete is less than 2 percent of either companyâs sales. Intel had more than $35 billion in net revenue last year, while Googleâs sales were nearly $24 billion.
