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The worst thing about this oligopoly/cartel is that during the period they were refusing to poach, they accrued billions cash reserves while spending only a lit

The worst thing about this oligopoly/cartel is that during the period they were refusing to poach, they accrued billions cash reserves while spending only a little on R&D (which I assume is mostly engineering salaries). Even after the class action lawsuit is settled, it's likely the penalty won't be anywhere near the amount of profit that was illegally captured. Furthermore, think about what these companies would have chosen to work on had engineers been more expensive. Would we have seen more useful products coming out of the valley if staff allocations had worked out differently? When people are cheap, throwing them into doomed ventures like Google Buzz or Apple's awful Samba clone isn't nearly so devastating to whatever middle manager chain dreamed them up.

cromwellian 13y ago
Presumably the shortage of labor was still real, and if they needed to hire people, but couldn't poach, then they hired them from the rest of the talent pool. If that's the case, then removing the "cold calls" from the talent search might have had the effect of actually driving up salaries for those not working at these companies, since potentially reduced the supply. If that's the case, then it would not have saved money, rather, it would have had the effect of simply shifting the money from going to existing Google/Apple/etc employees to applicants from smaller firms. That is, it changed the distribution of spending, and probably in a more egalitarian way, distributing the spending over a larger pool, instead of simply fighting over, and raising the wages, of the small group of superstars at the big companies. These companies are spending on R&D and increasing the percentage year over year, they are also spending huge sums of acqui-hires, and hiring faster than the local communities, or their own office space, can handle. You could argue that excessive salaries are actually bad for allocation. Wall Street has infamously brained drained tons of the best and brightest to figure out how to gain small efficiencies in stock trading. What discoveries might have occurred had string theorists not left to go optimize portfolios? One thing I wouldn't call engineers is cheap. You're talking about people making upwards of $150-200k in salary, and probably up to half-million when total compensation is considered. I paid more in taxes last year than my mother earned in several years of working as a cashier. And that's pretty sad. I grew up poor so I have a different perspective on this, but I see a lot of #zeroethWorldProblems whining going on in the valley while the world around them is falling apart. It's useful to have some perspective, and honestly, if these companies are to be fined and sanctioned, I'd rather the money go to poor people, instead of lawyers and techies who need to increase the bid on their studio apartment.
- gojomo 13y ago
  Not sure that the effects you theorize are true, but they're definitely possible, in the dynamic ways these shifting strategies affect real employment/resource decisions... as opposed to the simplistic "salary fixing" [sic] spin from some of the coverage. To an extent, existing employees with stock-based compensation, and also seeking "purpose/control/mastery" satisfaction at work, share their employers'/stockholders' interests in quelling rampant mercenary turnover and salary-over-all bidding wars. Another second-order beneficiary of any attempted employment cartelization could have been the startup ecosystem. As a founder or very-early employee, you "eat what you kill" rather than any industry-average salary. And, the pool of willing founders could have been expanded by missing/lower recruiting from the giants.
- Curmudgel 13y ago
  >Presumably the shortage of labor was still real, and if they needed to hire people, but couldn't poach, then they hired them from the rest of the talent pool. If that's the case, then removing the "cold calls" from the talent search might have had the effect of actually driving up salaries for those not working at these companies, since potentially reduced the supply. I don't think the evidence supports this theory. If the illegal agreements had artificially raised salaries then you would expect salaries to remain the same or even decrease after the DOJ stepped in. Instead, according to the WSJ, Google gave a 10% pay increase to all of its employees six weeks after the hiring collusion ended. http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pay-hike-and-antitrust-law/ http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pa...
  - judk 13y ago
    "All those employees" including almost all of whom were (as a fraction of population) junior/mid engineers who were never covered by the anti-recruiting agreement.
    - djb_hackernews 13y ago
      Show me the HR person who was willing to test the waters of who and who wasn't covered by the agreement.
tdaltonc 13y ago
I'm not sure that the oligopoly really captured that much money. Oligopolies only work when nearly everyone is in on it. If you have too many 'cheaters' than the cartel can't control the price. There were a lot of tech companies that weren't in on it. They were still poaching employees, and employees were leaving to do their own start-ups.
- gojomo 13y ago
  You're letting dynamic economic reasoning rain on the prosecutor- and journalist-fanned rage-fest. Math is hard, let's go suing!
  - doesnt_know 13y ago
    I hope you're not defending the practise? It shouldn't matter how effective the practise was, it's still wrong.
    - gojomo 13y ago
      I don't mind a no-cold-call/no-active-solicitation agreement between companies. (That is, even if it is illegal, I don't think it should be illegal.) I especially don't mind it if, as the great-grandparent suggests, the existence of other non-cartel competitors meant it had no effect on salaries. Even if it did have indirect effects on salary levels, such conventions might also plausibly help prevent certain kinds of ruinous/negative-sum-for-all competition, that rewards a few rapid job-switchers, but at the expense of the industry, region, or majority of employees. I would mind a "don't-hire-if-they-apply" agreement. That'd be an abusive oligopsony conspiracy in restraint of employees' ability to seek out new arrangements.
vqc 13y ago
Didn't the evidence indicate that engineers weren't off limits? That is, the companies were free to poach engineers from each other?
- CoolGuySteve 13y ago
  That is incorrect. This article specifically mentions engineers on the Safari team. Admittedly more tenuous, but other emails mention HR staffers being fired for cause due to contacting employees from another firm in the cartel. This would send a fairly extreme message to other recruiters about where to direct efforts. In my own experience, I never heard from Google while at Apple. 6 months after moving into finance, three recruiters from Google contacted me independently of each other. Ironically, the only reason I went into finance at the time was because I needed to move to NYC and Google wouldn't speak to me.
  - judk 13y ago
    You seem to be quoting Pandodaily's misinterpretation which is in no way supported by the documents they showed alongside their misinterpretation. The fired recruiter lied about a job offering and its pay level.
    - mikeyouse 13y ago
      Adobe CEO to Steve Jobs: I thought we agreed not to recruit any senior level employees…. I would propose we keep it that way. Open to discuss. It would be good to agree. Steve Jobs: OK, I’ll tell our recruiters they are free to approach any Adobe employee who is not a Sr. Director or VP. Am I understanding your position correctly? Adobe CEO: *I’d rather agree NOT to actively solicit any employee from either company ….. If you are in agreement, I will let my folks know.*
judk 13y ago
Google Buzz was G+ version 1, hardly a throwaway investment.
- chippy 13y ago
  maybe he should have used Google Wave as a more apt example. (Personally I think Wave was and still is ahead of its time)

cromwellian 13y ago

Presumably the shortage of labor was still real, and if they needed to hire people, but couldn't poach, then they hired them from the rest of the talent pool. If that's the case, then removing the "cold calls" from the talent search might have had the effect of actually driving up salaries for those not working at these companies, since potentially reduced the supply. If that's the case, then it would not have saved money, rather, it would have had the effect of simply shifting the money from going to existing Google/Apple/etc employees to applicants from smaller firms. That is, it changed the distribution of spending, and probably in a more egalitarian way, distributing the spending over a larger pool, instead of simply fighting over, and raising the wages, of the small group of superstars at the big companies. These companies are spending on R&D and increasing the percentage year over year, they are also spending huge sums of acqui-hires, and hiring faster than the local communities, or their own office space, can handle. You could argue that excessive salaries are actually bad for allocation. Wall Street has infamously brained drained tons of the best and brightest to figure out how to gain small efficiencies in stock trading. What discoveries might have occurred had string theorists not left to go optimize portfolios? One thing I wouldn't call engineers is cheap. You're talking about people making upwards of $150-200k in salary, and probably up to half-million when total compensation is considered. I paid more in taxes last year than my mother earned in several years of working as a cashier. And that's pretty sad. I grew up poor so I have a different perspective on this, but I see a lot of #zeroethWorldProblems whining going on in the valley while the world around them is falling apart. It's useful to have some perspective, and honestly, if these companies are to be fined and sanctioned, I'd rather the money go to poor people, instead of lawyers and techies who need to increase the bid on their studio apartment.

gojomo 13y ago
Not sure that the effects you theorize are true, but they're definitely possible, in the dynamic ways these shifting strategies affect real employment/resource decisions... as opposed to the simplistic "salary fixing" [sic] spin from some of the coverage. To an extent, existing employees with stock-based compensation, and also seeking "purpose/control/mastery" satisfaction at work, share their employers'/stockholders' interests in quelling rampant mercenary turnover and salary-over-all bidding wars. Another second-order beneficiary of any attempted employment cartelization could have been the startup ecosystem. As a founder or very-early employee, you "eat what you kill" rather than any industry-average salary. And, the pool of willing founders could have been expanded by missing/lower recruiting from the giants.
Curmudgel 13y ago
>Presumably the shortage of labor was still real, and if they needed to hire people, but couldn't poach, then they hired them from the rest of the talent pool. If that's the case, then removing the "cold calls" from the talent search might have had the effect of actually driving up salaries for those not working at these companies, since potentially reduced the supply. I don't think the evidence supports this theory. If the illegal agreements had artificially raised salaries then you would expect salaries to remain the same or even decrease after the DOJ stepped in. Instead, according to the WSJ, Google gave a 10% pay increase to all of its employees six weeks after the hiring collusion ended. http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pay-hike-and-antitrust-law/ http://blogs.wsj.com/law/2010/11/10/on-googles-10-percent-pa...
- judk 13y ago
  "All those employees" including almost all of whom were (as a fraction of population) junior/mid engineers who were never covered by the anti-recruiting agreement.
  - djb_hackernews 13y ago
    Show me the HR person who was willing to test the waters of who and who wasn't covered by the agreement.

tdaltonc 13y ago

I'm not sure that the oligopoly really captured that much money. Oligopolies only work when nearly everyone is in on it. If you have too many 'cheaters' than the cartel can't control the price. There were a lot of tech companies that weren't in on it. They were still poaching employees, and employees were leaving to do their own start-ups.

gojomo 13y ago
You're letting dynamic economic reasoning rain on the prosecutor- and journalist-fanned rage-fest. Math is hard, let's go suing!
- doesnt_know 13y ago
  I hope you're not defending the practise? It shouldn't matter how effective the practise was, it's still wrong.
  - gojomo 13y ago
    I don't mind a no-cold-call/no-active-solicitation agreement between companies. (That is, even if it is illegal, I don't think it should be illegal.) I especially don't mind it if, as the great-grandparent suggests, the existence of other non-cartel competitors meant it had no effect on salaries. Even if it did have indirect effects on salary levels, such conventions might also plausibly help prevent certain kinds of ruinous/negative-sum-for-all competition, that rewards a few rapid job-switchers, but at the expense of the industry, region, or majority of employees. I would mind a "don't-hire-if-they-apply" agreement. That'd be an abusive oligopsony conspiracy in restraint of employees' ability to seek out new arrangements.

vqc 13y ago

Didn't the evidence indicate that engineers weren't off limits? That is, the companies were free to poach engineers from each other?

CoolGuySteve 13y ago
That is incorrect. This article specifically mentions engineers on the Safari team. Admittedly more tenuous, but other emails mention HR staffers being fired for cause due to contacting employees from another firm in the cartel. This would send a fairly extreme message to other recruiters about where to direct efforts. In my own experience, I never heard from Google while at Apple. 6 months after moving into finance, three recruiters from Google contacted me independently of each other. Ironically, the only reason I went into finance at the time was because I needed to move to NYC and Google wouldn't speak to me.
- judk 13y ago
  You seem to be quoting Pandodaily's misinterpretation which is in no way supported by the documents they showed alongside their misinterpretation. The fired recruiter lied about a job offering and its pay level.
  - mikeyouse 13y ago
    Adobe CEO to Steve Jobs: I thought we agreed not to recruit any senior level employees…. I would propose we keep it that way. Open to discuss. It would be good to agree. Steve Jobs: OK, I’ll tell our recruiters they are free to approach any Adobe employee who is not a Sr. Director or VP. Am I understanding your position correctly? Adobe CEO: *I’d rather agree NOT to actively solicit any employee from either company ….. If you are in agreement, I will let my folks know.*

judk 13y ago

Google Buzz was G+ version 1, hardly a throwaway investment.

chippy 13y ago
maybe he should have used Google Wave as a more apt example. (Personally I think Wave was and still is ahead of its time)