An interesting article over at Pando focusing on what seems like large tech companies conspiring to keep wages down.
Back in January, I wrote about “The Techtopus” — an illegal agreement between seven tech giants, including Apple, Google, and Intel, to suppress wages for tens of thousands of tech employees. The agreement prompted a Department of Justice investigation, resulting in a settlement in which the companies agreed to curb their restricting hiring deals. The same companies were then hit with a civil suit by employees affected by the agreements.
This week, as the final summary judgement for the resulting class action suit looms, and several of the companies mentioned (Intuit, Pixar and Lucasfilm) scramble to settle out of court, Pando has obtained court documents (embedded below) which show shocking evidence of a much larger conspiracy, reaching far beyond Silicon Valley.
On the face of it, this is a bad thing. Companies should not coordinate their hiring so as to keep wages low. And, yes, it does appear that they were doing this, based on an email from Eric Schmidt, CEO of Google at the time:
- Google is the talk of the valley because we are driving up salaries across the board. People are just waiting for us to fall and get back at us for our “unfair” practices now.
- Our recruiting practices are “zero sum” and it appears that somewhere in Google we are targeting EBay to “hurt them” and its the reputation that we are doing this against Yahoo, EBay and MSFT (I denied this.)
The good folk at Google go on to further incriminate themselves in writing before Mr. Schmidt notices “…I don’t want to create a paper trail over which we can be sued later?” Um, a bit late on that one. [here's a tip: If you're concerned that something you are doing might be used as evidence against you later in court, don't put in writing that you're concerned the very thing you are doing might be used against you in court]
Now, having said some of the reasons why this is a bad thing (and it most likely is), it’s also somewhat defensible. Some of these companies have formally partnered together and/or have other arrangements in place. Those arrangements are fundamentally political in nature (in that it’s about the relationship between the two companies, not Republican/Democrat politics). Hiring valuable employees away from your partner will strain those relationships. So, there is a sound business rationale for not poaching employees — a rationale that does not consider wages at all. Even though that is a likely and predictable result of these arrangements.
I’m glad that the government is taking a look at this (which is an odd thing for me to say, but there you go). It will be interesting to see what kind of balancing act is worked out in the end, trying to manage freedom of association, freedom of speech, contract law, monopoly provisions, HR law — lots of interesting stuff going on here.