He is talking about the way that Google released a full touch-screen based phone to directly compete with the iPhone after becoming familiar with the project due to their board connections.
When Eric got onstage at the iphone keynote [1] and joked about Apple and Google being such great partners that they should merge, it got an honest laugh at the time but watching the same moment in retrospect is absolutely jarring.
[1] https://www.youtube.com/watch?feature=player_detailpage&v=9h...
Here's Steve, who had some experience losing a big market to a close partner, demonstrating the betrayal he felt from Google:
We did not enter the search business, Jobs said. They entered the phone business. Make no mistake teams at Google want to kill the iPhone. We won’t let them, he says. Someone else asks something on a different topic, but there’s no getting Jobs off this rant. I want to go back to that other question first and say one more thing, he says. "Don't be evil is a load of crap"
Now Apple is in the Maps business today and is slowly entering corners of the Search business as well but imo they didn't want to be and they aren't particularly good at it and know it. But the battle lines that were drawn in 2009 made it clear they had to abandon any ideas of partnering with Google for longer than they absolutely needed to.
* I don't think you can minimize the boost android got by having eric on apple's board during a very critical formative point
* Google completely abandoned their earlier prototypes once they saw (in the apple keynote) what apple had brewing.
If being on the board was so helpful, then why would Google need to abandon their previous approach?
Schmidt joined the Apple board August 29th 2006: http://www.apple.com/pr/library/2006/08/29Google-CEO-Dr-Eric...
Public iPhone announcement was January 9th 2007: http://www.apple.com/pr/library/2007/01/09Apple-Reinvents-th...
Also, the book that article is sourced from hashes out how the Google mobile software team working on iOS which was lead by Gundotra was a different body all together from Rubin's Android unit (who were actually gunning for Android to be shut down since they couldn't see the point of it). It's worth a read.
Android was a straegic ploy to avoid being shut out of the next computing platform by a dominant/monopolistic competitor. From some accounts, at the time Android was first planned, they believed that would be Microsoft - a much more natural competitor than Apple. The Apple/Google rift is a strange thing that had as much to do with Jobs’ personal emotions as anything else. While alive he set in motion a lot of Anti-Google initiatives such as Apple Maps, an army of lawsuits etc but i thik things will gradually cool off betwen the two as time passes.
Still, given what amazing companies they are, its sad that things will never go back to the "best buds” period that you mention here...