Massive Silicon Valley Liberal Billionaire wage-fixing scheme:
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Confidential internal Google and Apple memos, buried within piles of court dockets and reviewed by PandoDaily, clearly show that what began as a secret cartel agreement between Apple’s Steve Jobs and Google’s Eric Schmidt to illegally fix the labor market for hi-tech workers, expanded within a few years to include companies ranging from Dell, IBM, eBay and Microsoft, to Comcast, Clear Channel, Dreamworks, and London-based public relations behemoth WPP. All told, the combined workforces of the companies involved totals well over a million employees.
According to multiple sources familiar with the case, several of these newly named companies were also subpoenaed by the DOJ for their investigation. A spokesperson for Ask.com confirmed that in 2009-10 the company was investigated by the DOJ, and agreed to cooperate fully with that investigation. Other companies confirmed off the record that they too had been subpoenaed around the same time.
Although the Department ultimately decided to focus its attention on just Adobe, Apple, Google, Intel, Intuit, Lucasfilm and Pixar, the emails and memos clearly name dozens more companies which, at least as far as Google and Apple executives were concerned, formed part of their wage-fixing cartel.
A confidential Google memo (above, left) titled “Special Agreement Hiring Policy,” dating from November 2006, divides the company’s wage-fixing agreements into two categories: “Do Not Cold Call” and “Sensitive Companies.” Below that, the Google memo offers a brief chronology and list of companies:
The following companies have special agreements with Google and are part of the “Do Not Cold Call” list.
The first entry marks the beginning of Google’s participation in the wage-suppression scheme:
Effective March 6, 2005:
• Genentech, Inc.
• Intel Corporation
• Apple Computer
• Paypal, Inc.
• Comcast Corporation
Until now, neither Paypal (owned by eBay), Comcast nor Genentech have been publicly mentioned as part of the wage-suppression cartel. Nor have they been publicly named in criminal or civil actions relating to this particular case, although both the DOJ and the state of California are currently pursuing a separate but related antitrust suits against eBay.
The “effective date” of Google’s first wage-fixing agreements, early March 2005, follows a few weeks after Steve Jobs threatened Google’s Sergey Brin to stop all recruiting at Apple: “if you hire a single one of these people,” Jobs emailed Brin, “that means war.”
Jobs threatened Brin and Google on February 17, 2005; nine days later, Apple’s VP for Human Resources sent out an internal email to Apple recruiting,
All,
Please add Google to your “hands-off” list. We recently agreed not to recruit from one another so if you hear of any recruiting they are doing against us, please be sure to let me know.
Please also be sure to honor our side of the deal.
That was February 26; on March 6, Google’s identical non-solicitation agreement with Apple became “effective.”
This timeline is important to establish because it demonstrates precisely what makes this scheme illegal: secret cross-agreements between two or more parties to fix wages in the labor market, at a time when tech engineer wages were soaring, threatening profits.
This is just a tiny sample of the “overwhelming” evidence used by both the Justice Department’s antitrust division, and the District Court judge in San Jose, to debunk the company executives’ claims that each had coincidentally implemented identical non-solicitation policies at the same time, with the same companies, without knowing what the other side was doing.
From that point on, the secret cartel expanded. Later that year, in September 2005, eBay CEO Meg Whitman called Schmidt complaining that Google’s recruiters were hurting profits and business at eBay. Schmidt emailed Google’s “Executive Management Committee”—the company’s top executives— summarizing Whitman’s, and “the valley”’s view that competing for workers by offering higher pay packages was “unfair”:
 From: Eric Schmidt
Sent: Wednesday, September 7, 2005 10:52 PM
Subject: Phone call from Meg Whitman
DO NOT FORWARD
Meg called to talk about our hiring practices. Here is what she said:
1. 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.
2. 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.)
Schmidt’s email clearly prioritizes Whitman’s and other CEOs’ concerns over the rights of employees or the concept of fair competition, even ordering a Google executive to “fire the recruiter [who offended Whitman] immediately.” Schmidt’s email ends:
This was a rough call from a good friend. We need to get this fixed.
Within weeks of Whitman’s call to Schmidt, eBay was placed on a Google list of “Sensitive” companies, for whom Google placed fewer restrictions on its recruiters except at the executive recruitment level. It was at this time that Google began to internally formalize its illegal wage-suppression pacts—and Schmidt was clearly worried about getting caught.
In early October, 2005, Google’s Senior VP for Human Resources, Shona Brown, emailed Schmidt a draft list of companies on their “Do Not Call” and “Sensitive” lists, and the policy protocols.
Schmidt responded:
“This looks very good Eric”
Schmidt was then asked if Google sales executive Omid Kordestani could share “with Ebay/PP the rules as they pertain to them?”
Schmidt responded:
“I would prefer that Omid do it verbally since I don’t want to create a paper trail over which we can be sued later? Not sure about this.. thanks Eric”
Google’s HR head at the time, Shona Brown, agreed with her boss, in lower-case ee cummings syntax:
“makes sense to do orally. i agree.”
A year later, by the end of 2006, Google upgraded eBay to its “Do Not Cold Call” list, joining OpenTV, Nvidia Technologies, and Intuit along with the original five companies.
Google’s “Sensitive” companies list (right) had  meanwhile grown to include AOL, AskJeeves, Clear Channel, Earthlink, IBM, Lycos, and NTL, a major British cable company known today as Virgin Media.
Some of the companies Pando contacted for this article insisted, off the record, that they had not agreed to appear on Google or Apple’s lists, and that there were no reciprocal non-solicitation agreements. Indeed, that same line of defense was used by many of the defendants in the current case.
Of course, it’s possible that Google, Apple or others simply added companies to their don’t recruit lists without coordinating with them first. That said, as we see from the Whitman and Jobs emails above, addition to the list was frequently prompted by an angry phone call or heated discussion.
One example of this is Dell who, despite not being listed in the civil suit or DOJ investigation, was included on Google’s “don’t call” list after an angry email from Michael Dell himself.
On April 19, 2007, Dell wrote to Schmidt [typos Dell's—M.A.]:
Eric,
I learned recently that Google extend an offer to one of our sales guys, [REDACTED].
Not real happy about this and not the kind of think we would expect given our partnership.
We should discuss next time we are together but I think we should have a general understanding that we are not actively recruiting from each other.
Michael
Two days later, Schmidt forwarded Dell’s email to two top Google HR executives, and added his own comment up top:
Lets put them on the “don’t call into Dell” list for a while. Thanks eric
We’ll continue to press companies to comment on the record regarding any discussions which may have caused them to be added to Google or Apple’s lists.
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Incredible as it may seem, the Techtopus was just getting started. Between the end of 2006 and early 2008, its tentacles multiplied, reaching into the lives of workers across the globe and across more industries.
A confidential Google document titled “Special Agreement Hiring Policy,” dated January 7, 2008, expanded the categories and definitions of the company’s secret deals. What started as a two-page memo in late 2006, had now grown to a list nine pages long.
Under a new category, “Restricted Hiring,” the Google memo lists four firms and their subsidiares:
Parent Companies:
• Microsoft
• Novell
• Oracle
• Sun Microsystems
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But back to the Techtopus: Finally, Google’s 2008 memo lists 18 staffing agencies which Google has agreed not to recruit from:
“As a general rule, we should not be recruiting staffing talent from any of our approved staffing partners. The lists on the following page outline these partners for both the U.S. and International staffing.”
Among the staffing agencies listed: Kelly Services (US and worldwide), Kforce, CDI Business Solutions, Adecco, and others.
And Google isn’t the only company that kept a list. Buried in the court dockets is an email from Apple recruiting manager David Alvarez to fellow Apple recruiting manager Jonathan Geyer, dated July 9, 2009, containing a document titled “Hands Off (Do Not Call List).”
That list includes the other six firms charged by the DOJ and originally named in the wage-suppression class action: Adobe, Google, Intel, Intuit, Pixar and Lucas. But the Apple “Do Not Call” list also includes an additional 21 companies not mentioned in the DOJ investigation or the class action suit. Among the companies that appear to have conspired with Apple to suppress their employees’ wages:
Microsoft, AMD, Best Buy, Cingular, Foxconn, Nvidia, and a handful of distributors like Mac Zone, PC Connection and PC Mall. Some of the companies are on Apple’s “Do Not Call List” because, according to the memo, they share “common board members”: Intuit, JCrew, Nike, and Genentech, whose CEO at the time, Arthur Levinson, sat on Apple’s board of directors.
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http://pando.com/2014/03/22/revealed-apple-and-googles-wage-fixing-cartel-involved-dozens-more-companies-over-one-million-employees/ |
