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 scramble to settle out of court, Pando has obtained court documents which show shocking evidence of a much larger conspiracy, reaching far beyond Silicon Valley.
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.
A confidential Google memo 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,
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”:
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.
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 shlmeanwhile 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.
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.
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.
For now, it’s enough to try to absorb what all of these cross-company, cross-industry secret labor-fixing agreements mean. Most labor stories about wage theft and corporate abuse tend to focus on low-wage earners and the most disadvantaged. Certainly it strains one’s sensibilities to compare an exploited low-wage worker in the fast food or retail industry to tech engineers and programmers, who are far better compensated, live more comfortably, and rarely worry about putting food in their children’s mouths.
What’s more important is the political predicament that low-paid fast food workers share with well-paid hi-tech workers: the loss of power over their lives and their futures to the growing mass of concentrated power in Silicon Valley, whose tentacles are so strong now and so great, that hundreds of thousands of workers around the globe—public relations and cable company employees in the British Isles, programmers and tech engineers in Russia and China (according to other documents which I’ll write about soon)—have their lives controlled and their wages and opportunities stolen from them without ever knowing about it, all the while being bombarded with cultural cant about the wisdom of the free market, about the efficiency of free knowledge, about the need to take personal responsibility and to blame no one but yourself for everything that happens in your life and your career.