The Department of Justice has just settled an antitrust suit with Apple, Google, Intel and other firms over not cold-calling each other’s employees. The DoJ was worried the secret no-call policy was anti-competitive, so now the firms are freer to poach staff. Is this better?
Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc., and Pixar were targeted by a DoJ probe into an agreement the firms had made with each other years back–one of many “gentlemen’s agreements” that exist behind and above the normal rules of business (whatever they are) that keep businesses ticking along. The deal in question was that these firms wouldn’t cold-call each other’s employees to tempt them to work for alternative enterprises. In some circles it could be considered base thievery, and may suppress desire for inter-company business partnerships due to lessened trust at a corporate level–particularly if really prominent staff were targeted. In others it would be easy to argue that a company shouldn’t want to retain a staff member who could be so easily tempted by a flash of currency.
Whichever way you or the companies concerned thought about it, the DoJ saw it as a reason for worry because it led to “overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities.” As a result it just filed a civil antitrust case against the six firms, and proposed a settlement at the same time: All six must abandon any anti-cold-call policies they have with any of the others, for a period of five years.
The case targets not just cold-calling, but also any anti-compete policies about recruiting staff, but here is where the DoJ’s case gets murky. Because though the firms had agreed (in a complex web of deals, spelled out in the DoJ’s lawsuit) not to directly solicit each other’s staff, any other kind of action was acceptable–say if a Google employee, of their own volition, gently tested the waters at Apple to see if a move was possible. To this end, the companies weren’t really suppressing competitive pay deals for staff at all, and the DoJ was being heavy-handed, perhaps in an overly literal interpretation of the anti-competitive laws.
Google, responding to the news took the unusual step of making a public statement about it in a blog post: “In order to maintain a good working relationship with these companies, in 2005 we decided not to “cold call” employees at a few of our partner companies. Our policy only impacted cold calling, and we continued to recruit from these companies through LinkedIn, job fairs, employee referrals, or when candidates approached Google directly. In fact, we hired hundreds of employees from the companies involved during this time period.”
The Google statement is interesting for two reasons: It supports the notion of reasonable business practice associated with the no-call deals, over and above the DoJ’s strict interpretation of the law. And it’s an extremely open door into the normally secretive business goings-on that happen in all companies, and apparently particularly in Silicon Valley.
Companies have all sorts of work-arounds like the one in question in place with both their allies in business and their competitors (complicated by the fact that sometimes these are the same firm–look at Apple and Google for example) because real life is much more complicated than simple legal rules would have you believe. These sorts of deals, which tip-toe along the lines between overlapping regulations, happen throughout a company, and as you can imagine they get particularly twisty in the final moments before one firm buys another and everyone has to lay their cards on the table. The anti-calling deals these particular companies struck may smack of corporate intrigue, complete with imagery of chubby businessmen puffing cigars in darkened rooms and muttering in quiet, indirect code about their various dealings, but they are no more or less than the kind of legal rule-bending that goes on when a speeding ambulance breaks the law and jumps a red light and isn’t pursued for the “crime,” or a cop uses his judgment and doesn’t arrest you for J-walking at 3 a.m. when there was no traffic around.
Sometimes the agreements do indeed overstep the mark, and the DoJ’s intervention appears warranted. But who benefits in this case? The end-user consumer? The companies in question? The high-ranking employees implicated in the suit? These last would seem to be the real target, but it’s hard to imagine someone becoming senior enough to warrant poaching in these multi-billion dollar firms without also acquiring a keen sense of their own worth in dollars.
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