Big Tech Companies Agree To Pay Up Over Hiring Collusion

from the as-they-should dept

Thu, Apr 24th 2014 7:57pm — Mike Masnick

Last month, we pointed out that Google, Apple, Adobe and Intel would almost certainly settle, rather than face an ongoing lawsuit concerning their collusive hiring practices, in which they promised not to poach employees from one another in an effort to keep employees longer and (more importantly for them) to keep salaries down. That has now come to pass, with the four companies agreeing to pay out $324 million to settle the charges. This is good. As we noted in our original story, the hiring collusion was shameful and, worse, antithetical to the kind of job shifting and idea sharing that helped make Silicon Valley into Silicon Valley.

For many years, I've given a series of talks (often to foreign executives and government officials) about why Silicon Valley turned into Silicon Valley. Everyone assumes it's the obvious stuff about lots of venture capital or access to good colleges. And so they try to mimic that, back where they came from. But as you dig down into the Silicon Valley story, you quickly realize that, while those things helped, the true secret sauce is the easy job mobility here, with people constantly shifting jobs -- and sharing ideas across many different companies. What comes out of that is more innovation and the important big breakthroughs that have made this entire industry possible. A few top execs, led by Steve Jobs, tried to throw sand in those wheels, stupidly believing that it was more important to protect poaching of their own employees, ignoring how that also limited their own ability to cross-fertilize ideas and bring in top performers from other companies.

The history of Silicon Valley is littered with stories of job hopping, employment diasporas and the like. Look at how many successful companies that were formed in the past decade have some connection to PayPal, for example. Easy job mobility is a key factor in Silicon Valley to allow innovation to happen, and hopefully this ugly incident puts the issue behind the tech industry, and they can go back to actually innovating.

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Filed Under: collusion, hiring, poaching, tech companies
Companies: adobe, apple, google, intel

21 Comments

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That One Guy (profile), 24 Apr 2014 @ 6:11pm

Nice, but a little light
That amount might seem pretty hefty for a smaller company, but it's split up between the lot of them, and with companies that big, $81 million might seem like a decent chunk of change initially, but at the same time it's an amount that'll barely scratch the surface of their yearly earnings.

Not exactly likely to leave a lasting impression other than 'Don't get caught next time'.
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Anonymous Coward, 24 Apr 2014 @ 8:39pm

I agree, the fine is way, way too low. $81 million is like a mosquito bite, and doesn't deter anything like this from happening again. I'm sure this won't be the last time we hear about these types of employer schemes happening.
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Andrew Norton (profile), 24 Apr 2014 @ 8:57pm

Exactly, sure it sounds a lot but do the maths, it works out to $5,000 an employee, and that's BEFORE the lawyers cut. In the first round, the lawyers took 25%. now the payout's $3,750.
Two weeks wages, at most. Maybe a week's. Perhaps less.

Wow.

What a great deal...
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trollificus (profile), 24 Apr 2014 @ 9:04pm

The named companies are no longer the agile, aggressive innovators of Silicone Valley past. They are the RCA, GE, Kodak and JC Penney of the 21st century. (if not already the tech equivalents of Exxon, ADM, the **AAs and Goldman Sachs)

And with today's political/regulatory climate being so amenable to protecting "Big Anything", it's more likely they'll 'innovate' new and improved lobbying methods to protect their status and profitability than do anything to continue the vibrant and stimulating climate in which they themselves were formed.

Sad, and sadly predictable.
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Andy, 25 Apr 2014 @ 2:24am

jobs
It seems like every time there is a new revelation about Steve Jobs he comes out looking like a real jerk who abused his power, I hope that now he is not in the picture any more that the lack of innovation while he had any hand in goings on in the Valley will not come out and be lambasted as this one has been.
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Ninja (profile), 25 Apr 2014 @ 2:38am

Re:
That. Nowadays to actually become huge a company will need to have very favorable conditions: insanely innovative product that people want desperately, being lucky in the beginning by not catching the attention of all the patent trolls out there, not falling into the MAFIAA's radar.......

Though times to be a starter.
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Ninja (profile), 25 Apr 2014 @ 2:42am

Re: jobs
The fact that Jobs was a genius and introduced awesome innovation into the market doesn't nullify the fact he was a jerk in quite many aspects. The contrary is also true.

The Godwin path: Hitler was a genius if you think rationally. Doesn't invalidate the fact he committed horrendous crimes. And vice-versa.
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PT (profile), 25 Apr 2014 @ 3:13am

I'm an engineer, getting on a bit now, and this sort of collusion has been a fact of life my entire career. Whenever there's a group of similar tech companies in the same area, you have to go outside the area even to get a job interview. Once you get out of the area for a while, though, any of those companies will hire you back.

It can't be stopped, at least not so long as nobody goes to jail for doing it.
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known (profile), 25 Apr 2014 @ 3:16am

Every MNC is a Pyramid/Ponzi scandal in globalization
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Anonymous Coward, 25 Apr 2014 @ 5:48am

The moral of the story!
It is cheaper to screw over people and just pay the government fine, or settlement, or whatever if you get caught!

It's like playing at the Casino... except the odds are in YOUR favor. Play a little get a little, play a lot and get A LOT!
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Anonymous Coward, 25 Apr 2014 @ 5:53am

Re: Re:
Nowadays to actually become huge a company will need to have very favorable conditions:

Yea a government backed monopoly guaranteed or at least assisted by regulation. Pick toys, telecom, manufacturing, oil, or Taxes.

Think about just how hard it is to start your business because of all of government shit you have to wade and jump through! Same reason why Taxes businesses like to lobby government to make them more complicated forcing people to buy their services.
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Anonymous Coward, 25 Apr 2014 @ 8:58am

Re: Re:
Yes, the "MAFIAA's radar", that's the real problem. Uh huh.
/s
Hahaha, what a moron.
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known (profile), 26 Apr 2014 @ 12:14am

Market capitalization of MS and GOOG should be restricted to 5 times their book value
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nasch (profile), 27 Apr 2014 @ 7:47am

Re: Re:
Nowadays to actually become huge a company will need to have very favorable conditions:

Mostly they'll get bought by one of the companies in this story before getting that big.
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Technolink, 5 Sep 2014 @ 9:57am

About
This is really good
Chittagong Outsourcing institute
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known (profile), 4 Nov 2014 @ 5:48am

Impose tax on company revenues, not profits.
Income tax is imposed on your salary, not savings.
http://news.yahoo.com/warren-buffett-secretary-talk-taxes-221442297--abc-news.html
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SoftChamp, 3 Dec 2014 @ 11:49pm

IT giants
Recently, Google and Apple have been caught that bypassing UK tax law as well
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known (profile), 22 May 2015 @ 6:37am

Tell Obama regime to impose tax on corporate revenues, not profits;
You're paying income tax on your salaries, not savings;
http://news.yahoo.com/warren-buffett-secretary-talk-taxes-221442297--abc-news.html
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