Techtopus wage supression suit settled: Terms secret for now
The wage collusion case that suppressed the earnings of millions of engineers working at numerous technology companies has ended with a settlement. The defendants and the remaining plaintiffs -- Google, Apple, Intel, and Adobe -- announced the settlement today.
From our initial report on the suit:
The secret wage-theft agreements between Apple, Google, Intel, Adobe, Intuit, and Pixar (now owned by Disney) are described in court papers obtained by PandoDaily as “an overarching conspiracy” in violation of the Sherman Antitrust Act and the Clayton Antitrust Act, and at times it reads like something lifted straight out of the robber baron era that produced those laws. Today’s inequality crisis is America’s worst on record since statistics were first recorded a hundred years ago — the only comparison would be to the era of the railroad tycoons in the late 19th century.And here's Pando's Mark Ames explaining the case to CBS This Morning viewers...
The trial was scheduled to begin on May 27 after the companies' last-ditch effort to have the case dismissed was denied in March. While the case focused on the four companies listed above, Ames revealed earlier this year that more than a dozen companies and over one million workers were affected by the wage-suppressing, non-poaching agreements.
The most notable dissident in the widespread agreements was Facebook, which declined to join the wage-fixing cartel after Google approached the newly-hired Sheryl Sandberg to see if she would make a similar agreement. That abstention, which Farhad Manjoo noted at Pando in 2012 and Ames reported in March, led to wage increases at Google and other companies.
From our report on the effect Sandberg and Facebook had on Silicon Valley wages:
According to testimony from Sandberg, recently unsealed, almost as soon as she left Google for Facebook in March 2008, her former Google colleagues began discussing ways to bring her and Facebook into the illegal wage-suppression cartel.
For her part, Sandberg insists that she and Facebook rejected Google’s overtures, and the evidence (much still redacted) supports her position. People familiar with this case who have spoken off the record to PandoDaily back up Sandberg’s account as well. Here's the press release announcing the settlement:
Apple Google Intel and Adobe to Settle Anti-Poaching Suit
April 24, 2014 (San Francisco, CA) – Kelly M. Dermody of the national plaintiffs' law firm Lieff Cabraser Heimann & Bernstein, LLP, announced today that a settlement has been reached with Apple Inc., Google Inc., Intel Corporation, and Adobe Systems Inc. in the class action lawsuit charging that these companies violated federal antitrust laws by conspiring for years to suppress the pay of technical, creative, and research and development employees, including by agreeing not to actively recruit each other's employees. The terms of the settlement are confidential until Plaintiffs file their settlement papers with the Court next month.
"This is an excellent resolution of the case that will benefit class members. We look forward to presenting it to the Court and making the terms available," stated Dermody, Co-Lead Counsel for the Plaintiff Class.
Class counsel will file with the Court a motion seeking preliminary approval of the settlements, approval of a plan to provide notice to the class, and set a date for a hearing on final settlement approval.
Today's settlement follows settlements reached last year with Lucasfilm Ltd., Pixar, and Intuit Inc. for a combined $20 million. Pando weighs in
Pando's Tim Worstall explained why the wage collusion would have had Karl Marx "choking on his cornflakes":
The actions of the Techtopus, as detailed here at Pando by Mark Ames, would have had Marx choking on his cornflakes. Or at least screaming “I told you! I told you this would happen!” For this is exactly what he meant by “monopoly capitalism” — and was the end state of capitalism that he wanted so desperately to warn us against.
To recap Ames: various tech bosses colluded in making sure that they didn’t try to poach staff from each other. To the point that at least one of them, Eric Schmidt, said that they wouldn’t even accept people from certain companies who weren’t poached but had tried to reach Google under their own steam. This is clearly not conducive to rising incomes for those who would parlay competition for their services into a higher paycheck. It’s also illegal. And Pando's Sarah Lacy explained the pact's main weakness in her own post:
But missing from the debate is one thing that does make the tech world and Silicon Valley different from this kind of collusion and corruption in industries like finance or health insurance: Comparatively, the giants don’t stay the giants for very long. That means there’s only so much control they can exert. This isn’t happenstance — it’s the way the industry is set up. Silicon Valley is a machine that creates new multi-billion dollar companies every decade to disrupt the old. That means power is continually shifting.
Case in point: As the CEOs of Apple, Google, Intuit, Intel, Adobe and others were actively working to make sure that developer wages didn’t spiral out of control, developer wages started to increase. Why? As TechCrunch covered in detail at the time, it started with an all-out aggressive bidding war for talent between Facebook and Google. The problem for the Techtopus? They didn’t include surging giants like Facebook, LinkedIn, Twitter, and others in their pact. Today, those are some of the largest consumer Internet companies in the world, and no doubt better at recruiting top talent than Adobe or Intuit.
We'll have more on the settlement soon. In the meantime, the rest of our Techtopus coverage can be found here.