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Google CEO No Longer an Apple Insider

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Tension from iPhone app removal reaches breaking point.

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There's a point during a lovers' quarrel when -- amidst the finger pointing and plate throwing -- the two sides need to retreat to neutral corners to preserve a semblance of a relationship. But in some notably tense situations, that brief separation could be indicative of a more substantial split.

And given the circumstances, that might be the case here.

Google (GOOG) CEO Eric Schmidt has stepped down from Apple's (AAPL) board of directors. Having been on the board since August 2006, Schmidt has weathered awkward situations due to the companies' competing cell phones, web browsers and -- after Google's announcement last month -- operating systems.

In a brusquely worded press release, Apple CEO Steve Jobs writes:

"[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."

Aside from the snippy tone, is that all there is to it? A conflict of interest over similar products?

Not quite.

Apple's iTunes App Store has long come under fire for its questionable App approval process. (Who could forget the Baby Shaker app?) But many iPhone owners claimed the company went too far by removing the official Google Voice app as well its imitators. Apple maintained it was due to the "duplication of existing iPhone functions and features" -- a claim that's rendered entirely moot by the existence of many apps featuring text messaging and Skype (EBAY) capabilities.

If the relationship between Google and Apple was considered tenuous at that point, it was downright chilly when Apple also rejected the Google Latitude app before it was even submitted.

Some analysts reported that it was AT&T (T) -- iPhone's American provider -- who pushed for the Google Voice removal since it allows for far cheaper international calls. But AT&T spokesperson Brad Mays released a statement saying, "AT&T does not manage or approve applications for the App Store," -- also a dubious claim given its involvement with blocking TV-streamer Slingbox from the iPhone.

The whole fiasco caught the eye of the Federal Communications Commission (FCC) who launched an inquiry into Apple's recent move. Late last week, the agency sent letters to all 3 parties, asking for the details to the Google Voice app removal and whether AT&T was involved with the decision.

All things considered, it's surprising that Eric Schmidt's resignation didn't include gunfire.
No positions in stocks mentioned.
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