Schmidt steps down as Apple and Google lock horns for all-out war

Conflicts of interest over iPhone and Android has meant that Apple chief would have to recuse himself from essential meetings

Eric Schmidt, the chief executive of Google, is to leave the board of Steve Jobs' computer giant Apple, marking a definitive split between two of Silicon Valley's most powerful frenemies.

The pair, once the best of friends, have had an increasingly complicated relationship, as Google has found itself moving into business that increasingly rival Apple's. Yesterday's announcement signalled that both fear they could be moving to outright war, as Google tries to dominate the software and services available on a new generation of laptop computers and mobile phones.

Mr Schmidt, who joined Apple's board in 2006, already had to excuse himself from discussions about the iPhone, because Google is trying to get its operating system Android installed on rival smartphones. Now, with the company planning an operating system for laptops, too – Chrome OS – Mr Schmidt could also find himself having to leave the room for discussion about Apple's Macintosh range of computers.

And the rivalry came to a head in another area last week, when Apple rejected Google's plan to start selling its Google Voice software for the iPhone. Google Voice, which is already available for Blackberries and other smartphones, would allow iPhone users to bypass many of the expensive call and text message charges levied by AT&T, the telecoms operator which offers Apple's iPhone in the US.

In recent interviews, Mr Schmidt had been insisting the conflicts of interest could be managed, but Mr Jobs said yesterday it was clear the two companies were on a collision course. "Eric has been an excellent board member for Apple, investing his valuable time, talent, passion and wisdom to help make Apple successful," he said. "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."

The decision was mutual, Mr Jobs said, and Mr Schmidt added: "I have very much enjoyed my time on the Apple board. It's a fantastic company. But as Apple explained today we've agreed it makes sense for me to step down now."

In an interview in Saturday's San Jose Mercury Mr Schmidt had said he saw no problem with continuing on the board. "Apple and Google have a lot of technical partnerships. The underpinnings of Chrome are the same as that of Apple's Safari browser. There is a lot of collaboration around web standards. We collaborate on the maps area. We have a large number of iPhone apps. 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."

Google Voice, which went live six weeks ago, allocates users a single phone number and allows them to choose whether to use their mobile, office or home phone lines for calls. Apple's decision to bar Google from making the service available for download from the iPhone's "app store" sparked fury on tech industry discussion forums last week, and the Federal Communications Commission said it was launching a competition investigation on Friday.

The Department of Justice has already launched a variety of other investigations into Google's growing power over the internet. The resignation of Mr Schmidt raises questions over the position of Al Gore, the former US vice-president, who is also an Apple board member and a special adviser to Google.