Friday, September 17, 2010, 08:25 am PT (11:25 am ET)
Apple, Google may settle in US antitrust probe of anti-poaching dealsApple, Google and other technology companies are said to be in negotiations with the U.S. Department of Justice for a potential settlement regarding an antitrust investigation of anti-poaching agreements.
Apple and Google are joined by Disney's Pixar, Intel, Adobe and Intuit in the "final stages of negotiations" with the U.S. government, according to The Wall Street Journal. The Justice Department was looking into the companies over allegations that they "colluded to hold down wages by agreeing not to poach each other's employees."
Last year, it was revealed that Apple and Google shared an agreement not to poach each others' companies while Eric Schmidt, the search engine company's chief executive, served on both corporations' boards. The unwritten agreement was said to be considered protocol and helped to spark the antitrust investigation from the U.S. Justice Department.
It was said that the "gentlemen's agreement" between the two companies forbid them from going after each others' employees. But employees of both Google and Apple were reportedly free to apply to the other company on their own.
The Justice Department's investigation also found last year that Ed Colligan, a former chief executive of Palm, rejected an anti-poaching offer allegedly made by Apple co-founder Steve Jobs. In communications obtained, Colligan reportedly told Jobs that his proposal was "likely illegal."
Jobs allegedly told Colligan he was concerned when Jon Rubinstein, Apple's former senior engineering vice president, was named executive chairman of Palm. In the correspondence, Jobs reportedly said he was worried that Rubinstein would recruit existing Apple employees.
The Journal said that the Justice Department, in a potential antitrust case, would have to be able to prove to a court that the anti-poaching agreements existed, and workers suffered "significant harm" because of them.
"The companies may not want to take a chance in court," the report said. "If the government wins, it could open the floodgates for private claimants, even a class action by employees. A settlement would allow the Justice Department to halt the practice, without the companies having to admit to any legal violations."
It called the talks "fluid," noting that some companies are more willing to settle to avoid a suit than others. The Justice Department has conducted an investigation for more than a year, and has allegedly uncovered evidence of similar agreements between companies in other industries beyond the tech sector.
"The companies have argued to the government that there's nothing anticompetitive about the no-poaching agreements," the report said. "They say they must be able to offer each other assurances that they won't lure away each others' star employees if they are to collaborate on key innovations that ultimately benefit the consumer."