This past July, Google CEO Eric Schmidt left Apple’s board presumably for the same reason. The cozy relationship between the companies, which increasingly compete in the cellphone and operating systems markets, had led the FTC to question whether close ties between their boards of directors violate antitrust laws. With Schmidt gone from Apple’s board room and Levinson gone from Google’s, it would seem there’s no longer reason for the FTC to do so.

“Art has been a key part of Google’s success these past five years, offering unvarnished advice and vital counsel on every big issue and opportunity Google has faced,” Schmidt said in a statement. “Though he leaves as a member of our Board, Art will always have a special place at Google.”

Though not nearly as special as his place at Apple, where his remaining board seat and true allegiances clearly lie.

UPDATE:Levinson’s resignation from Apple’s board appears to have appeased the FTC. “Google, Apple, and Mr. Levinson should be commended for recognizing that overlapping board members between competing companies raise serious antitrust issues and for their willingness to resolve our concerns without the need for litigation,” FTC chairman Jon Leibowitz said in a statement. “Beyond this matter, we will continue to monitor companies that share board members and take enforcement actions where appropriate.”

Which is interesting since Sewell has been quarterbacking Intel’s (INTC) fight against antitrust allegations at home and abroad since, well, since they were first brought against the company in Japan. And Korea. And the United States, and now the European Union as well.

So to hear he’s leaving today after 14 years with the company with no explanation of why or where he’s headed…

to hear there’s no one lined up to take his place (Suzan Miller, currently deputy general counsel, will become interim general counsel until a replacement is found)…

and to hear this at a time when the company is grappling with some of the most important legal issues it’s ever faced…

when the U.S. Federal Trade Commission and the European Commission are both probing Intel’s alleged antitrust violations in the microprocessor market…

when the company is just six months away from going to trial with rival chip maker AMD (AMD), which accuses Intel of using illegal inducements to dissuade OEMs from buying AMD processors and “knee-capping” those who did….

Well, it’s all a bit odd, isn’t it?

I mean Sewell’s Intel bio is already returning “Page Not Found” errors (see below; click image to enlarge).

What’s going on in Intel legal? Reached for comment, the company didn’t have much of an answer to the question other than to say that Sewell is leaving of his own accord and it’s sad to see him go. “All I can say is that Bruce has decided voluntarily to leave the company,” Intel spokesman Chuck Molloy told me. “We are not talking about his plans. He was not forced to leave and we were surprised by his decision.”

UPDATE: Sewell’s leaving Intel to become General Counsel at Apple.

In a statement issued this afternoon, the FTC applauded the move, but said the two companies are foolish if they think it will simply abandon its inquiry as a result.

“We have been investigating the Google/Apple interlocking directorates issue for some time and commend them for recognizing that sharing directors raises competitive issues, as Google and Apple increasingly compete with each other,” said Bureau of Competition Director Richard Feinstein. “We will continue to investigate remaining interlocking directorates between the companies.”

In other words, Schmidt’s departure was a nice start, but the Commission still worries that Google (GOOG) director Arthur Levinson’s presence on Apple’s (AAPL) board–as well as that of Google advisers Bill Campbell and Al Gore–might lead to conflicts of interest or unfair business practices.

So who’ll be the next to leave: Levinson or Gore?

“Eric is obviously doing a terrific job as CEO of Google, and we look forward to his contributions as a member of Apple’s board of directors. Like Apple, Google is very focused on innovation and we think Eric’s insights and experience will be very valuable in helping to guide Apple in the years ahead.”

–Apple CEO Steve Jobs, August 2006

“Apple is one of the companies in the world that I most admire. I’m really looking forward to working with Steve and Apple’s board to help with all of the amazing things Apple is doing.”

–Google CEO Eric Schmidt, August 2006

Asked earlier this year if he would resign from Apple’s board in the face of Federal Trade Commission scrutiny of the close ties between the two companies’ boards of directors, Google CEO Eric Schmidt replied simply, “It hasn’t crossed my mind.”

Well, apparently it has now.

Citing the growing overlap of the two companies’ businesses, Schmidt is giving up his seat on Apple’s board, which he has held since August 2006.

“Eric has been an excellent Board member for Apple, investing his valuable time, talent, passion and wisdom to help make Apple successful,” said Steve Jobs, Apple’s CEO. “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. Therefore, we have mutually decided that now is the right time for Eric to resign his position on Apple’s Board.”

“I have very much enjoyed my time on the Apple board,” Schmidt said in a statement of his own. “It’s a fantastic company. But as Apple explained today we’ve agreed it makes sense for me to step down now.”

A wise move. Schmidt’s boardroom role was already reduced because of competitive issues between the iPhone and Android and between Safari and Chrome. Given the obvious competitive issues between the Mac and Google operating systems, it is inevitable that his board involvement would shrink again. Had he retained his seat, Schmidt would have likely spent more time standing outside Apple’s boardroom than in it.

So why bother? Better to step down and avoid the appearance of impropriety, especially when regulators seem to be singling Google (GOOG) out for all manner of scrutiny. Certainly, Apple (AAPL) must be relieved to have the guy with the FTC target on his back out of the boardroom.

And relations between the two companies must have been a bit strained by this Google Voice for iPhone debacle.

You know the ones I’m talking about, I’m sure. They’ve been occurring since 2007 and go something like this: “This is the second notice that the factory warranty on your vehicle is about to expire.” Hang up and the machine calls you again later. Transfer to a “warranty specialist” and ask to be taken off the call list and you’re either hung up on or, in my case, given an 800 number to call that turns out to be a phone sex line.

In complaints filed in United States District Court in Chicago, the agency accuses telemarketer Voice Touch and warranty outfit Transcontinental Warranty of deceptive sales practices and violating telemarketing rules with their relentless prerecorded sales pitches for extended vehicle warranties. Among the companies’ numerous violations: dialing every number in a given area code, including those listed in the National Do Not Call Registry; robocalling 911 emergency centers; regularly spoofing call recipients by transmitting phony Caller ID information so that call they can’t identify the originating number; and pressuring consumers into purchasing bogus extended service contracts for their cars.

“This is one of the most aggressive telemarketing schemes the FTC has ever encountered,” chairman Jon Leibowitz said in a statement. “I’m not sure which is worse, the abusive telemarketing tactics of these companies or the way they try to deceive people once they get them on the phone.”

Right on. One question though: If this is the most aggressive telemarketing scheme the FTC has ever encountered, why did it take the agency two years and 30,000 complaints to finally jump into action?

Anyway…

The FTC has asked for temporary restraining orders to halt the illegal robocalls, an asset freeze on both defendants and a permanent injunction that would force them to disgorge their ill-gotten gains.

UPDATE: A federal judge has issued temporary restraining orders against the companies halting their “robo-dialer harassment.” He has also frozen their assets until a May 29 hearing on the FTC’s request for a preliminary injunction.

In advance of its shareholder meeting today, Google is holding a press event at its Mountain View, Calif., campus with CEO Eric Schmidt presiding. Also on hand: Dave Drummond, senior vice president of corporate development; Susan Wojcicki, vice president for product management, Kent Walker, general counsel, and Marissa Mayer, vice president, search products and user experience.

Hot topics of the day: Google’s and Apple’s interlocking boards, YouTube and the company’s thoughts on the econalypse, AOL and netbooks.

This liveblog paraphrases most questions and answers. It is not, in other words, a verbatim transcript of the event.

A theme of the meeting is the just-opened inquiry by the Federal Trade Commission into Apple’s and Google’s interlocking boards. Schmidt gets right into the topic with a joke: Looks like we’re at a legal deposition. He adds that he doesn’t believe Google (GOOG) views Apple (AAPL) as a primary competitor. If there are issues that are competitive during a board meeting, he will recuse himself, he says, just as he has regarding the iPhone.

Would Schmidt consider resigning from the Apple board?

Schmidt: “Hasn’t crossed my mind.” Ken Walker adds: “The law is clear that there is safe harbor for companies that don’t have overlapping revenues, and we’re comfortable with that position.”

Regarding the recession, are there any signs that we’re at the bottom?

Schmidt: “We don’t yet see a change.”

As Google gets bigger and faces more antitrust scrutiny, does this change how the company approaches partnerships?

Schmidt: Information is incredibly important, and we should expect governments around the world to pay attention to what we do and hold us to the principles we’ve articulated. Internally we tell our employees to pay attention, there are consequences to mistakes they make.

In the last few years, we’ve worked harder to anticipate the concerns of people affected by the power of the Internet. In my biased judgment, we’re getting better at anticipating those concerns.

We are more careful about when and how we do things that are raising the concerns of any party, but that care doesn’t stop us from doing those things.

Is there anything you haven’t done because of that?

Schmidt: I can’t think of a specific.

What do you think of the long-time monetization potential of social networks?

Susan Wojcicki: “We’ve been learning a lot about monetizing social inventory. And we believe there are ways to monetizie it over time, but those ways are different from search.”

Why did Google decide to sell its stake in AOL?

Schmidt: “We love AOL….We also like money… and look, we sent our best guy over there to run it,” he says referring to Tim Armstrong who recently left Google for AOL.

When will YouTube be profitable?

Schmidt: YouTube will eventually be a successful product and business. We don’t know how long that will take. But YouTube is a huge traffic phenomenon. (Wojicki jumps in to note that that traffic is attracting a lot of advertiser interest, so there is monetization going on. She adds that Google is adding new ad formats to the site, prerolls and click-to-buy ads on music videos.)

How does Google continue innovating given the cost-cutting measures it recently implemented?

Schmidt Innovation is a cultural value at Google, so this hasn’t really been an issue. Cutbacks were more efficiency-related, a move to stay lean but nimble in the midst of a recession.

What’s your take on the balance between Android being an open platform and the trade-offs the company needs to make with handset makers?

Schmidt: “On the one hand, you benefit by having free access; on the other hand there is some sacrifice of stability. We are doing our best to achieve stability without exercising too much control.”

What about China?

Dave Drummond: It’s an “ongoing challenge” to operate there. YouTube is blocked. There is a government preference for local business that makes things very difficult. That said, “we think we’re doing well there.”

Schmidt: “We will continue to do business in China….We would like YouTube unblocked.”

How do you respond to critics who argue that Google is the new Microsoft (MSFT)?

Schmidt: “They obviously don’t remember the old Microsoft.”

In recent public forums you’ve been asked about acquisitions and you’ve said the price isn’t right right now. Has there been any change in that opinion?

Schmidt: No change. There’s simply just not a lot of activity out there now.

What are your thoughts on netbooks?

Schmidt: “The netbook phenomenon looks very real. It looks like it will be a significant element of growth in the PC industry over the next few years.” Schmidt further notes that Google is obviously interested in the market given its business. “Watch the space,” he concludes.

Ironic, yeah?

It’s not certain why WSGR prepared the presentation, but the document obviously applies to the close ties between Apple (AAPL) and Google (GOOG) and, if nothing else, offers insight into the “interlocking directorates” provision of the Clayton Antitrust Act of 1914 and just why the FTC might be concerned that the companies may be in violation of antitrust law by sharing four board members and advisers between them: Google CEO Eric Schmidt, Genentech (DNA) CEO Art Levinson, Intuit (INTU) chairman Bill Campbell and former vice president Al Gore.

According to the WSGR presentation, the Clayton Act stipulates that a person cannot serve as director or officer of two or more competing companies when the two are engaged in U.S. or foreign competition; each has $25,319,000 in aggregate capital, surplus, and undivided profits; and at least one has two percent in overlapping sales (note: while that $25 million figure was correct at the time the deck was prepared, it has since risen to $26,161,000). Now, Apple and Google clearly both meet the “aggregate capital, surplus, and undivided profits” condition. They probably don’t meet the second, but it’s conceivable that they might in the future as Google’s Android platform rises to challenge Apple’s iPhone in the mobile phone software and services market.

And if and when they should? Well, that leads to what WSGR describes as “occasion of sin”– a theological term that refers to circumstances that by their very nature lead to sin.

In other words, inevitable sin. And competition between the two companies is no absolution, either. As the presentation explains, there is “no safe harbor for de minimus competition.” Given the obvious overlaps between Google and Apple–between both products and directors–the two companies would seem to be heading for some sort of confrontation with the FTC. Especially if, as sources say, Google CEO Eric Schmidt has no intention of resigning from Apple’s board–even in the face of increasing government scrutiny of the company.

UPDATE: WSGR tells me the document was prepared for an internal training session. It had no explanation for why the firm published it on the Web.

UPDATE: As Danny Sullivan notes in the comments, Google has removed the cached version of the document — rather expeditiously. However, there’s still a cached version available over at Microsoft.

Clayton Act Section 8 Interlocking Directorates – Free Legal Forms

“Eric is obviously doing a terrific job as CEO of Google, and we look forward to his contributions as a member of Apple’s board of directors. Like Apple, Google is very focused on innovation and we think Eric’s insights and experience will be very valuable in helping to guide Apple in the years ahead.”

–Apple CEO Steve Jobs, Aug. 2006

“Apple is one of the companies in the world that I most admire. I’m really looking forward to working with Steve and Apple’s board to help with all of the amazing things Apple is doing.”

–Google CEO Eric Schmidt, Aug. 2006

He had a good run of it, but Google CEO Eric Schmidt’s stint as an Apple director may be coming to an end.

Now that the Federal Trade Commission is investigating whether the close ties between Apple’s and Google’s boards of directors violate antitrust laws, Schmidt’s seat on the former’s board, which he has held since August 2006, seems more trouble than its worth.

People briefed on the matter tell the New York Times that the FTC is concerned that Schmidt’s presence on Apple’s board–as well as that of Google director Arthur Levinson and Google advisers Bill Campbell and Al Gore–might lead to the conflicts of interest or unfair business practices. And that seems a reasonable concern; certainly those sorts of things sometimes occur when a coterie of people hold influence over several major firms simultaneously.

While Google (GOOG) and Apple (AAPL) compete in a number of areas–browsers and mobile operating systems–the two have also worked together closely to bring a number of Google services to the iPhone. They also share a common enemy in Microsoft (MSFT).

So it’s not surprising to hear that the FTC is raising an eyebrow over the cozy relationship between the companies–especially, given its previous interest in Google and the opinions of U.S. antitrust chief Christine Varney, who recently described the company as a monopolist.

Nor will it be surprising when Schmidt resigns from Apple’s board, if this inquiry goes further. That’s typically what happens in these situations when things start heading toward a longer investigation.

So, given the amount of antitrust scrutiny currently leveled at Google, it’s almost certainly what will happen here.

In recent days the commission has subpoenaed Intel, AMD and a number of their PC-maker customers as part of a probe into Intel’s pricing policies, which some claim are engineered to maintain a near-monopoly on the chip market. Intel, which has long claimed that its business practices are well within U.S. law, did so again today in a statement announcing its cooperation with the FTC investigation. “The evidence that this industry is fiercely competitive and working is compelling,” it said. “For example, prices for microprocessors declined by 42.4% from 2000 to the end of 2007. When competitors perform and execute, the market rewards them. When they falter and under-perform, the market responds accordingly.”

But what if a competitor, say AMD, falters and underperforms because a rival is threatening its customers? What if it falters because a rival is using illegal inducements to dissuade PC-makers from buying AMD processors and “knee-capping” those who do? Which is what AMD accused Intel of in its 2005 antitrust lawsuit. In 2000, for example, Michael Capellas, then chief executive of Compaq Computer, allegedly told AMD that Intel had withheld the delivery of some microprocessors he needed for servers because of Compaq’s relationship with AMD. He told AMD he would stop buying from it, saying he “had a gun to his head.” And in 2004, Gateway officials are alleged to have told AMD that Intel “beat them into guacamole” in retaliation for their limited dealings with its rival. And these are but two incidents in a list that includes similar alleged acts of coercion by Intel involving 38 other computer makers, distributors and retailers.

“It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer,” Icahn wrote in a letter to Yahoo’s leadership. “I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.”

So strongly, in fact, that Icahn–who owns 59 million Yahoo shares–has asked the Federal Trade Commission for permission to buy as much as $2.5 billion more of the company’s stock and has assembled a 10-member alternative board slate. Among the directors nominated, Icahn himself, his lieutenant Keith Meister, former Viacom Inc. (VIA) Chief Executive Frank J. Biondi Jr., and Dallas Mavericks owner Mark Cuban (Mark Cuban?!?).

And lest there be any doubt that Icahn was gunning for anything less than a referendum on Microsoft’s takeover offer, the financier concluded his letter with a parting word of advice: “I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary.”

What’s not yet clear is whether Microsoft is even willing to resume merger talks. Though it’s certainly possible that Microsoft CEO Steve Ballmer and Icahn have been having some back-channel chats about the issue recently …

Yahoo and Microsoft are both trading higher on the news.

… For Google, privacy did not begin and does not end with our acquisition of DoubleClick. And we believe that privacy for legislators, regulators, privacy groups and other stakeholders shouldn’t begin or end with Google. Privacy is a serious issue that spans several industries from financial services to entertainment to e-commerce, and that ought to be addressed holistically in the interest of individuals throughout Europe and the world. One particular company–and certainly one particular merger–should not be singled out.”

–Peter Fleischer, Google’s Global Privacy Counsel

The Federal Trade Commission’s decision to approve Google’s proposed $3.1 billion acquisition of online ad-serving vendor DoubleClick without condition hasn’t exactly elicited resounding calls of huzzah! from the European Union. On the contrary, European parliamentarians seem out to spoil the deal.

At a hearing before the European Parliament’s Civil Liberties Committee to discuss the legality of search companies’ privacy policies, talk quickly turned to the acquisition and its potential impact on citizens’ online privacy. Seems a few of the EU’s top privacy regulators feel that IP, or Internet Protocol, addresses should be protected as personal information when they can be used to identify an individual on a computer network. Google, which uses IP addresses to identify users’ geographical location, among other things, disagrees.

After first upbraiding the committee for attempting to shoehorn a privacy case into a competition law review, Peter Fleischer, Google’s Global Privacy Counsel, pointed out that IP addresses aren’t always personally identifiable. “There is no black or white answer: Sometimes an IP address can be considered as personal data and sometimes not,” he said. “It depends on the context and which personal information it reveals.” And this is true to some extent, but becoming less so as we move toward Internet Protocol version 6 (IPv6).

Of course, were IP addresses to be categorized as personal information, Google would have a more difficult time delivering relevant search results and, more importantly, ads. Which, as Dutch parliamentarian Sophie in ‘t Veld pointed out is the real reason Google is arguing so vehemently against treating IP addresses as sensitive personal data. “The reason you want to have the data is because it gives you a competitive advantage,” she said. “It is business. I don’t think they can be completely disconnected. And we should discuss that side of things too. … Having that much information is market power.”

This proposed acquisition raises serious competition and privacy concerns in that it gives the Google DoubleClick combination unprecedented control in the delivery of online advertising, and access to a huge amount of consumer information by tracking what customers do online.”

–Microsoft General Counsel Brad Smith

The Federal Trade Commission isn’t going to let calls for the recusal of Chairwoman Deborah Platt Majoras or the concerns of Microsoft, AT&T and consumer advocacy groups at home and abroad get in the way of Google’s purchase of online ad-serving vendor DoubleClick.

The FTC today voted 4-1 to approve the $3.1 billion acquisition without condition. “After carefully reviewing the evidence, we have concluded that Google’s proposed acquisition of DoubleClick is unlikely to substantially lessen competition,” the commission’s majority wrote in a statement, adding that it planned to keep an eye on the company should it wield its market power unwisely. “The markets within the online advertising space continue to quickly evolve, and predicting their future course is not a simple task,” the commission continued. “Accounting for the dynamic nature of an industry requires solid grounding in facts and the careful application of tested antitrust analysis. Because the evidence did not support the theories of potential competitive harm, there was no basis on which to seek to impose conditions on this merger. We want to be clear, however, that we will closely watch these markets and, should Google engage in unlawful tying or other anticompetitive conduct, the commission intends to act quickly.”

One would hope so. In a lone dissenting opinion, commissioner Pamela Jones said the merger of Google’s data with DoubleClick’s is potentially quite problematic.

The transaction will combine not only the two firms’ products and services, but also their vast troves of data about consumer behavior on the Internet. … I acknowledge that behavioral targeting may create economic efficiencies that would–in the short run–be attractive to the parties’ advertiser and publishing customers (putting aside for a moment the potential impact on consumers on the privacy front). Still, marrying the two datasets raises long-term competition questions that beg further inquiry.

• In a post-merger online advertising market driven by the value of behavioral targeting, will Google/DoubleClick face meaningful competition?
• Will any other firm be able to amass a dataset of the same scope and size?
• Will any other company be able to overcome network effects and offer an equally focused level of behavioral targeting?
• If advertisers and publishers have to channel their online advertising through Google/DoubleClick in order to access the best dataset that supports targeted advertising, will any other firms have the ability or incentive to compete meaningfully in this market?

“… I am convinced that the combination of Google and DoubleClick has the potential to profoundly alter the 21 century Internet-based economy–in ways we can imagine, and in ways we cannot. I do not doubt that this merger has the potential to create some efficiencies, especially from the perspective of advertisers and publishers. But it has greater potential to harm competition, and it also threatens privacy. By closing its investigation without imposing any conditions or other safeguards, the commission is asking consumers to bear too much of the risk of both types of harm.”

The FTC’s ruling now leaves the final decision on the deal to the European Commission.