Apple, Google, and other tech companies made a secret pact to keep employee salaries low while making billions

Sponsored Links

John-Michael Bond
February 20, 2014 12:00 AM
Apple, Google, and other tech companies made a secret pact to keep employee salaries low while making billions


In theory, the tech world is supposed to be a bastion of freedom -- people with the best ideas are recruited by the best people to build the best products. Libertarians often point to Silicon Valley as an example of how the free market can set people free. It only works, however, if people are truly given the freedom to go where their talent takes them. But what would happen if two companies made a deal not to poach the best and brightest from each other? Furthermore, what if that deal suppressed salaries in the tech sector by $3 billion?

What should be rhetorical questions are actually hard realities that have come to light with the revelation that Google and Apple, along with other companies, worked in collusion to guarantee they'd leave each other's employees alone. The claims, first revealed by PandoDaily in January, are at the heart of an ongoing class action lawsuit that is scheduled to go to court in May.

Today, Josh Harkinson at Mother Jones magazine filed a report with further details of the behind the scenes maneuvers between Apple's Steve Jobs, Google's Eric Schmidt, and Intuit's Bill Campbell to directly work to artificially keep wages low using a wide range of dirty, and possibly illegal, tricks.

The story starts in 2005 when Bill Campbell of Intuit brokered a deal between Jobs and Schmidt to agree not to hire anyone from each other's firms. Apple's and Google's respective hiring directors sent out emails to their staff ordering them to add their respective rivals to their no-call lists, in an effort to not compete for employees.

Schmidt knew their actions were wrong. Mother Jones reports he emailed another executive to only discuss the no-call lists verbally, so as not to create a paper trail; the kind we're talking about right now. These no-poaching policies were the subject of a 2010 antitrust lawsuit filed by the Department of Justice.

According to court documents obtained by Mother Jones from the 2010 case, Steve Jobs was a leader in the anti-recruitment movement. It paints a very dark image of the Apple icon, even showing him willing to bully other CEOs into toeing the "party" line.

In one instance not yet reported, Jobs allegedly played hardball with a reluctant CEO. In mid-2007, he called Edward Colligan, then president and CEO of Palm, to propose "an arrangement between Palm and Apple by which neither company would hire the other's employees," Colligan testified in a sworn deposition. When he refused, citing the deal's possible illegality, Jobs threatened to sue Palm for patent infringement. "I'm sure you realize the asymmetry in financial resources of our respective companies..." he wrote Colligan in a follow-up email. "My advice is to take a look at your patent portfolio before you make a final decision here."

This isn't a case of a few hiring managers making employee retention easier. These are CEOs of some of the most powerful companies in the world -- the policies involved companies like Adobe, Intel, Intuit, and Pixar as well -- actively working to keep the cream from rising to the top if it meant doing so at another company.

Beyond keeping one another from offering jobs to highly skilled employees of competitors, senior management discussed salary data to make sure everyone had similar budgets for raises. It's hard to get a raise when every business in town agrees to pay the exact same wage. Where is the free market in quantifying the value of someone's work, when a handful of people with all the power work together to create a glass ceiling for promotion and pay alike?

It's a fascinating look at the darker side of the tech world. Head over to Mother Jones for more stories directly from these recently unsealed court documents. Very rarely do you get to look at an honest to god conspiracy among billionaires to suppress the growth of lower level talent in their industry. It reads like a paranoid rant on Facebook, only backed up with incredibly sad fact.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.
Popular on Engadget