When Lawyers Send Letters

Wage Fixing Scandal: Google, Apple, Intel and Adobe Pay $324 Million In Damages

The “Techtopus’s” biggest players settle in an antitrust battle with 64,000 employees.
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(via Marthin Sühl)

After the tech crash of the early 2000’s, major tech CEO’s started sending each other emails saying, ‘Hey, why don’t we try not to poach each other’s employees? It could keep salaries from going through the roof.’ Some, including Steve Jobs himself, would call that a gentleman’s agreement. The Department of Justice, however, calls it collusion, and now some of the biggest names in tech history are paying up.

Apple, Google, Intel and Adobe have agreed to settle a class action lawsuit for $324 million, Reuters is reporting. About 64,000 tech workers sought a combined $3 billion in damages, and while the settlement is technically a victory, it comes out to roughly $5,000 per employee — a far cry from the roughly $47,000 each that they wanted.

The wage fixing scheme was led in 2005 by Steve Jobs, who reached out to tech leaders personally to strong-arm them into the agreement, as PandoDaily originally reported in their “Techtopus” series. The cartel grew for years, and the list of companies involved goes on and on, including the big four mentioned above, plus Pixar, eBay, Intuit and Lucasfilm.

Wage fixing is when a few top-level executives decide that in order for business to run smoothly and efficiently (or just not have to pay their workers so much), they’ll agree not to go after each other’s employees. While it seems like a polite idea among CEO’s who are friends and allies, it also makes sure workers can’t freely negotiate their own salaries. Companies are supposed to be at war — independent interests drive competition, and that’s fundamentally how capitalism works.

For example: Facebook COO Sheryl Sandberg, in a valiant act of keeping it real, rejected the pressure from Google to join the wage fixing ring and kept trying to poach Google’s engineers, according to unsealed testimony. When Google found out, they considered a full blown poaching war with Facebook.

Instead, Google just raised their wages. Which is what’s supposed to happen.

Collusions and cartels are prosecuted under antitrust law, the family of laws that govern competition and monopolies. And with the way Silicon Valley giants continue to expand and seek antitrust approval for their acquisitions, we find it hard to believe that this will be their last run-in with trust-busting.

Follow Jack Smith IV on Twitter or via RSS. jsmith@observer.com