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Tuesday, May 13, 2014

Silicon Valley's Antitrust No-Poaching Violations ran Deeper and Broader

These are exciting times to study the talent wars. In Talent Wants to Be Free, I examined the “gentlemen agreements”, starting in 2005, by top executives at Google, Apple, Intel, Intuit, Pixar and eBay to not hire each other’s employees. “No one calls, networks or emails into the company or its subsidiaries looking for people”, top execs agreed among themselves. I argued that these collusive arrangements hurt not only the employees implicated by these lists, and the labor market more generally, but also the companies themselves and the knowledge flows in Silicon Valley which made it the innovative and energetic region it is today. In 2010, the Antitrust Division of the United States Department of Justice investigated these practices and deemed them per se violations. DOJ settled rather quietly with these high tech giants and when I was writing my book, published just a few months ago, I was surprised that no one seemed to be too bothered by these practices. Things changed with the certification of a private class of 64,000 former employees, who argued that the anti-competitive practices depressed their wages in the industry. Suddenly, the case got a lot of headlines: in a recent NYT op-ed, I described the case as a lead in to a broader argument and I have been commenting on the proposed settlement of the class action in a number of recent articles. Mark Ames at Pando should especially be noted for his investigative efforts, for example here.

What is striking to me at the moment, and I am trying to figure it out, is that even the class action, is potentially only the tip of the iceberg. The do-not-call agreements spun beyond Silicon Valley globally, for example, one email reveals Google’s Pacific Leadership Recruiter asking Google’s Director of Recruiting to confirm whether they can cold call companies in Korea “excluding the ‘do not cold call’ companies, of course”. Other emails show that Europe-based employees were also off-limits. And what’s even more interesting, the do-not-call-lists covered far more companies than have been implicated in the lawsuits.  There is evidence to suggest that other companies, including Comcast, Genentech, Paypal, Nvidia, Dell, Microsoft, DoubleClick Earthlink, AOL, AskJeeves, Clear Channel, Oracle, Lycos, Palm, Best Buy, Nike, Foxconn, and Bell Canada may have been involved in these human capital collusions, appearing on Google’s do not call lists. My assessment: there is much more to uncover and the sooner the better. Talent wants to be free not only for its own good but because that's how regions grow and flourish.

Posted by Orly Lobel on May 13, 2014 at 06:13 PM | Permalink

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