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The Perils of Google's New War on Apple

Google has much to lose in its ill-advised PR and public policy war with Apple, its previous closest Silicon Valley ally.

Antitrust or Fiduciary liablility? Google's recent market behavior puts Google and its CEO Eric Schmidt in a lose-lose situation.

  • Remember this time last year the FTC began investigating Google and Apple for potentially collusive over-lapping board seats, despite Mr. Schmidt's assertion at the time that Apple was not a "primary competitor" to Google. 
    • Mr. Schmidt resigned from the Apple board under FTC pressure in August 2009.
  • Google and its CEO are now in a real pickle:
    • Either Google's very recent competitive entry into competition with Apple's: iPhone (Droid), iPad (Google Tablet), AdMob, Apple TV (Google TV), and ITunes (Google Music) -- is prima facie evidence that Mr. Schmidt was colluding with Apple to not compete before... OR Google CEO Eric Schmidt is under intense personal risk of having violated his personal fiduciary duty as an Apple Director to protect and advance the interests of Apple and its shareholders.
    • It's hard to believe that Google has been able to launch all these new direct competitive alternatives to Apple: Droid, Google Tablet, AdMobGoogle TV, and Google Music, in just the last year, with no involvement of Google CEO Eric Schmidt, who should have recused himself because of his intimate knowledge of Apple's business, strategy, innovation secrets, and product launch timetable.
    • This makes the Apple patent infringement suit against HTC a very serious threat to Google CEO Eric Schmidt personally, given his longtime fiduciary duty to protect Apple and its shareholders from when he was a Apple Director. 
      • While the official legal target of the suit was Google supplier HTC, I believe the real goal is to gain legal discovery/depositions of Mr. Schmidt and all his product managers of 
        Droid, and possibly Google Tablet, AdMob, Google TV, and Google Music.
      • If legal discovery of Google's emails and other records find that Mr. Schmidt passed on any knowledge of Apple's plans or trade secrets, Google, and Mr. Schmidt personally, are at serious legal risk.
        • Moreover, this is not hypothetical risk, given what has been learned of Google's "Freewheeling culture" from Viacom's depositions against Google-YouTube.
        • If Google handled its launches of its phone, tablet, mobile, TV, and music businesses anything like they handled their entry into video via YouTube, this serious personal fiduciary liability Mr. Schmidt faces could turn out to be the most serious risk yet to Google's long term leadership stability.         

 Brand Liability:  Apple's longstanding innovation leadership as a closed proprietary system, undermines Google mantra and claim that openness is the key to innovation. Google's attacks on Google for being closed, will only invite more attention to Google's self-serving openness double standard, where it pushes openness where it facilitates Google entering new businesses with a competition-killing, cross-subsidized free offering, but where Google fiercely resists any openness regarding its opaque black box monopoly markets of search and search advertising -- the place openness is most needed. 

  • Google's attempts to brand Apple as anti-innovation defies common sense and widespread personal experience, and it only invites comparison to where Google is not at all open, despite its boasts to the contrary.

Privacy Liability: Google's pervasive invasion of privacy is a huge franchise liability for Google. Google collects more private information about more people without permission than any entity in the world. (See Chart: "Google's Total Information Awareness Power")

  • Per USAToday:
    • "The debate was on vivid display again during the D8 tech conference this month, when Apple CEO Steve Jobs weighed in on the topic. "Privacy means people know what they are signing up for in plain English," he said. "Some people want to share more data. Ask them. Ask them every time. Let them know precisely what you are going to do with their data."
  • As Google tries to misdirect the FTC antitrust investigations toward Apple and away from Google, Apple has the same ability to boomerang FTC concerns about privacy back at Google.    

In sum, Google remains its own worst enemy. It serially tattles to regulators and antitrust authorities about the slightest thing others do to Google, all while Google routinely operates well beyond the accepted boundaries of antitrustcopyright, privacy, and security

  • Those in glass houses should not be pathological stone-throwers.