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I was under the impression this agreement, at least initially, was to prevent anticompetitive poaching. Suppose Apple wants to dominate search. One way to do s

by peyton 11y ago

I was under the impression this agreement, at least initially, was to prevent anticompetitive poaching. Suppose Apple wants to dominate search. One way to do so is to poach every Google search engineer by offering to triple their salaries. These companies agreed not to do that. Yeah, it's illegal, but what options did these executive have? California effectively bans noncompete clauses. And there's enough money in the system and teams are typically small enough that dismantling a competitor is feasible. Google Engineer Sarah shouldn't be paid triple Google Engineer Jessie just because she works on a product that's valuable to Competitor X. Edit: original post not clear enough. Reproducing a reply below: >The problem was with using money to prevent your competitors from doing business. Doing so subverts the free market. Suppose every time a competitor rented office space, you bought the building and evicted them. Suppose Walmart opens a store in SoMa that sells groceries at a tenth of what surrounding stores sell, then jacks prices when those stores fold. To ELI5: you run a lemonade stand. Your neighbor Susie also has a lemonade stand. Susie's mom doesn't like your parents and wants you to fail, so she pays the store $500 to not sell you lemonades. Yeah, the market price of exclusive lemonade rights is now $500, but unreasonable sums are being spent to prevent competition. Something's wrong. There are laws against most anticompetitive practices, but not all. Part of the motivation behind the poaching agreement was filling a gap. You could dismantle a competitor by paying everyone and anyone in their product's critical path to simply not work there anymore. The solution, an antipoaching agreement, was illegal.

kuschku 11y ago
> Google Engineer Sarah shouldn't be paid triple Google Engineer Jessie just because she works on a product that's valuable to Competitor X. So, instead of a Demand-Supply based free market for jobs, you want the same wages for everyone? I’m sorry, but even for me as a left-leaning european that’s too socialistic.
- peyton 11y ago
  Hmm, I don't think the original post was clear enough. The problem was with using money to prevent your competitors from doing business. Doing so subverts the free market. Suppose every time a competitor rented office space, you bought the building and evicted them. Suppose Walmart opens a store in SoMa that sells groceries at a tenth of what surrounding stores sell, then jacks prices when those stores fold. To ELI5: you run a lemonade stand. Your neighbor Susie also has a lemonade stand. Susie's mom doesn't like your parents and wants you to fail, so she pays the store $500 to not sell you lemonades. Yeah, the market price of exclusive lemonade rights is now $500, but unreasonable sums are being spent to prevent competition. Something's wrong. There are laws against most anticompetitive practices, but not all. Part of the motivation behind the poaching agreement was filling a gap. This was illegal.
  - ksk 11y ago
    Extending your logic, suppose one company spends a hundred million on online marketing and you can spend $80. Guess who goes out of business first? More money wins over less money. There is no way to get around that without fundamentally altering the economic model.
  - pacala 11y ago
    There are 100 stores on a 20 miles radius. Surely Susie's mom has better things to do than to spend $50,000 and untold time to convince the managers of every single store in the metro to not sell lemons to u/peyton.
pacala 11y ago
Let me get this straight. CEO Schmidt gets payed 100x more than both Google Engineer Sarah and Google Engineer Jessie just because he gets to manipulate their salaries.
- peyton 11y ago
  I think that's a straw man. Buying out a competitor's employees en masse is an anticompetitive tactic that, if used widely, arguably may negatively affect the health of the industry as a whole. Not saying these executives' actions were right. Just that there were considerations other than saving a buck on salaries.
  - metaphorm 11y ago
    > Buying out a competitor's employees en masse is an anticompetitive tactic can you provide me an example of when this has ever occurred or are you just speaking of hypotheticals? I'm skeptical. convince me that it is even possible to poach employees en masse.
hobs 11y ago
> Google Engineer Sarah shouldn't be paid triple Google Engineer Jessie just because she works on a product that's valuable to Competitor X. If they want to keep the employee, they absolutely need to match what others are willing to pay. That you suggest otherwise is nonsense in the american job market. Cheating to get a better price is as you acknowledged, illegal, and most of the time you will find the market begins to even out those weird bumps by creating incentives for others to learn/work on that skillset (because of the higher rewards.) This is very equivalent to "Well why should we pay engineer X more when they are working the same number of hours as marketing person Y?" Its a comparison that doesn't make sense unless you want to pretend that the employer does not benefit as a result of the value the employee produces. If the engineer is 3x more valuable to the other company and not to your bottom line, its an obvious time for that engineer to move, not be made a slave by anti-competitive agreements between employers. Hopefully you will be able to find someone to work on your product at a price point that your business can derive some value from, but if not, its probable that your business sucks.
- peyton 11y ago
  I agree it's wrong. I was just elaborating on the reasons it happened, as I haven't seen it explained in press and I know people who were affected in 2005 when this started.
ljw1001 11y ago
There's no such thing as "anticompetitive poaching". Not recruiting the best people you can is anti-competitive
metaphorm 11y ago
> anticompetitive poaching. thats an oxymoron. poaching talent IS competition between companies.

by peyton 11y ago

kuschku 11y ago

> Google Engineer Sarah shouldn't be paid triple Google Engineer Jessie just because she works on a product that's valuable to Competitor X. So, instead of a Demand-Supply based free market for jobs, you want the same wages for everyone? I’m sorry, but even for me as a left-leaning european that’s too socialistic.

peyton 11y ago
Hmm, I don't think the original post was clear enough. The problem was with using money to prevent your competitors from doing business. Doing so subverts the free market. Suppose every time a competitor rented office space, you bought the building and evicted them. Suppose Walmart opens a store in SoMa that sells groceries at a tenth of what surrounding stores sell, then jacks prices when those stores fold. To ELI5: you run a lemonade stand. Your neighbor Susie also has a lemonade stand. Susie's mom doesn't like your parents and wants you to fail, so she pays the store $500 to not sell you lemonades. Yeah, the market price of exclusive lemonade rights is now $500, but unreasonable sums are being spent to prevent competition. Something's wrong. There are laws against most anticompetitive practices, but not all. Part of the motivation behind the poaching agreement was filling a gap. This was illegal.
- ksk 11y ago
  Extending your logic, suppose one company spends a hundred million on online marketing and you can spend $80. Guess who goes out of business first? More money wins over less money. There is no way to get around that without fundamentally altering the economic model.
- pacala 11y ago
  There are 100 stores on a 20 miles radius. Surely Susie's mom has better things to do than to spend $50,000 and untold time to convince the managers of every single store in the metro to not sell lemons to u/peyton.

pacala 11y ago

Let me get this straight. CEO Schmidt gets payed 100x more than both Google Engineer Sarah and Google Engineer Jessie just because he gets to manipulate their salaries.

peyton 11y ago
I think that's a straw man. Buying out a competitor's employees en masse is an anticompetitive tactic that, if used widely, arguably may negatively affect the health of the industry as a whole. Not saying these executives' actions were right. Just that there were considerations other than saving a buck on salaries.
- metaphorm 11y ago
  > Buying out a competitor's employees en masse is an anticompetitive tactic can you provide me an example of when this has ever occurred or are you just speaking of hypotheticals? I'm skeptical. convince me that it is even possible to poach employees en masse.

hobs 11y ago

> Google Engineer Sarah shouldn't be paid triple Google Engineer Jessie just because she works on a product that's valuable to Competitor X. If they want to keep the employee, they absolutely need to match what others are willing to pay. That you suggest otherwise is nonsense in the american job market. Cheating to get a better price is as you acknowledged, illegal, and most of the time you will find the market begins to even out those weird bumps by creating incentives for others to learn/work on that skillset (because of the higher rewards.) This is very equivalent to "Well why should we pay engineer X more when they are working the same number of hours as marketing person Y?" Its a comparison that doesn't make sense unless you want to pretend that the employer does not benefit as a result of the value the employee produces. If the engineer is 3x more valuable to the other company and not to your bottom line, its an obvious time for that engineer to move, not be made a slave by anti-competitive agreements between employers. Hopefully you will be able to find someone to work on your product at a price point that your business can derive some value from, but if not, its probable that your business sucks.

peyton 11y ago
I agree it's wrong. I was just elaborating on the reasons it happened, as I haven't seen it explained in press and I know people who were affected in 2005 when this started.

ljw1001 11y ago

There's no such thing as "anticompetitive poaching". Not recruiting the best people you can is anti-competitive

metaphorm 11y ago

> anticompetitive poaching. thats an oxymoron. poaching talent IS competition between companies.