If six of the largest tech companies got caught fixing prices, they'd be accused of an illegal restraint of trade and might face huge fines and even jail time under the Sherman Antitrust Act. Simply put, they'd get a serious kick in the ass. So why did eBay this week get a mere slap on the wrist -- a light one, at that -- for its admitted practice of conspiring with Intuit not to hire each other's staffers, a trend-setting scheme copied by at least four other tech giants?
Surely, that's price fixing and restraint of trade. By not poaching, as the practice is called, the co-conspirators held down wages and limited the freedom of workers to bargain as participants in what is supposed to be a free market.
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Adding the proverbial insult to injury is the amazing productivity of workers at those companies. Apple, for example, reaps $2.1 million in revenue from each man and woman who works there; Google gets $1.2 million, and eBay gets $509,000. But every single one of those companies got off lightly in this wage-suppressing anti-poaching conspiracy.
Of course, more was involved in these tech firms' collusion than holding down salaries. The companies were afraid that employees who defect would take valuable intellectual property with them. That's a bogus fear as well: Common employment agreements generally assign rights to discoveries made at work to the employer.
What the employees could take with them was their brainpower, which could help their then-employer's competitors. That was the real reason: Locking employees away from current or future competitors -- so much for the libertarian and meritocratic principles we hear so much about in Silicon Valley.
The eBay-Intuit handshake that started the antipoaching collusion
To refresh your memory on the eBay/Intuit collusion that started this whole saga: eBay's then CEO, Meg Whitman, and Intuit founder Scott Cook (then on eBay's board of directors) struck a handshake deal back in 2006, agreeing not to poach each other's employees, according to documents filed in federal and state courts. Other tech giants -- Adobe, Apple, Google, and Intel -- followed suit.
Word eventually got out, and the federal Department of Justice and the California attorney general investigated. Then they sued.
Under the settlement proposed in May and cleared Tuesday by Judge Edward J. Davila of the U.S. District Court for the Northern District of California, eBay is prevented for five years from entering into or maintaining agreements with other companies that restrain employee recruitment and hiring.
California Attorney General Kamala Harris announced a related settlement in May with eBay, with the company agreeing to pay restitution and civil penalties of a bit less than $3.8 million, including $300,000 for the harm to the state's economy.
Talk about a slap on the wrist! Last year, eBay's revenue was a bit more than $16 billion, which works out to $1.8 million an hour -- breaking the law cost eBay about two hours of revenue. Has eBay learned its lesson? Probably not, since earlier this year it said, "The policy that prompted this lawsuit was acceptable and legal, and led to no anticompetitive effects in the talent market in which eBay competed."