US Justice to ratchet tech no-poach probe
Non-hiring practices at Google, Apple, Intel...
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The US Department of Justice is about ready to ratchet an investigation into what could be salary fixing in the tech industry, according to a report citing people familiar with the matter.
Antitrust lawsuits usually focus on the effects that collusion among providers of a good or service to fix prices or carve up markets, thereby undermining competition and harming consumers. In rare cases, companies agree not to poach each others' employees, which has the effect of ensuring that key workers, who would normally be attracted by higher offers from competitors, stay put for less money than they might otherwise work. So, instead of keeping prices artificially high, this practice keeps costs artificially low.
The DOJ refused to comment on the story, but according to a report in the Wall Street Journal, Google, Intel, IBM, Apple, and InterActiveCorp are being investigated. An IBM spokesperson told the paper that it had indeed been contacted by the Justice Department in relation to a broad investigation into tech and non-tech hiring practices, and an Intel spokesperson would not confirm anything about an investigation, but did add that the chip maker believes its hiring practices to be legal. Google, Apple, and IAC did not comment.
The precedent for such action is a bit skinny, but the Antitrust Division has launched similar labor-related lawsuits in the past, including one in 1994 against hospitals in Utah that colluded to keep the pay of nurses down by exchanging pay rates and another in 1995 against the American Bar Association by the Massachusetts School of Law, which alleged that it was denied accreditation by the ABA because it didn't pay its law school professors enough dough. Both of these cases were settled before they went to trial.
It has been a long time since the United States had an aggressive antitrust bent, much less one that didn't pretty much look the other way when it came to antitrust law. Democrats tend to be more for using antitrust law to curb excesses than their Republican compatriots, but a moderate Republican like Teddy Roosevelt, who used the Sherman Antitrust Act to show he was tough on big business and therefore should keep his job as President, will swing the antitrust stick from time to time to keep big business from getting too far out of line.
It is no coincidence that these two barely related labor antitrust cases mentioned above, as well as the antitrust case against Microsoft, happened in the Clinton Administration, or that the Republican Bush Administration that came to power to as the Microsoft case was being appealed pulled back on some of the tougher remedies that the DOJ had originally sought to curb Microsoft's most egregious and monopolistic behavior during the Clinton presidency. It is similarly not a coincidence that the 1952 antitrust lawsuit that made IBM start behaving itself and to a certain extent allowed for the creation of a more open data processing and then open computer business for the next five decades, got started at the end of the Democratic Truman Administration and was followed through to an actual consent decree agreed to by Big Blue by a moderate Republican Eisenhower Administration.
At the end of the Johnson Administration (yup, a Democrat), the DOJ launched another antitrust lawsuit against IBM, one that the incoming Republican Nixon Administration didn't spike but which did not get to trial until after Nixon had resigned and his successor, Gerald Ford, took over. And the case dragged on until finally President Reagan's antitrust chief, William Baxter, withdrew the suit against IBM, saying it had no merit. This, being a case that had been underway for 13 years. By the way, at the time, Baxter was a consultant to a law firm that worked for IBM. And just to show you how incestuous this can all be, Nicholas deBelleville Katzenbach, who was Johnson's Attorney General and then Under Secretary of State, went to work as general counsel for IBM right after the second antitrust lawsuit was launched by the DOJ in 1969.
While it is significant to note that the Obama Administration is taking antitrust issues more seriously than its predecessor, there are many things about business and the tech industry that people can be too jaded and too cynical about. Antitrust law, and how it is wielded or not depending on the politics of the moment, is not one of them. Nothing works quite so well as sensible regulation, and nothing is so hard to come by. ®
COMMENTS
Beats the alternative
over-detailed regulation has lots of problems, but as the last 35 years have shown
no effective regulation is far worse. Do you want a return to medieval serfdom ? Despite the lies of the rich, it is not a stable situation for a society, let alone a civilisation.
@AC
Communism, like capitalism is a bad plan. They are both extremes on the spectrum, with socialism being the meeting point between the two. Would I suggest the US become a socialist country? Hell yes; with a loud and deafening endorsement. The US, indeed most of the world could truly benefit from a healthy dose of European socialism. Take the best of countries like France, Germany, Sweden etc. Learn from their systems to see what has the greatest benefit for their citizens, and where they made mistakes setting their countries up. It's fair play. They looked at your country (among others) to find the mistakes in how yours was set up when they last redesigned their economic and social systems.
As to "how capitalism works; free movement of goods and skills," the problem is that there isn't a free movement of goods and skills. There is only a free movement of skills. It's easy for companies to get access to cheap labour; less so for regular citizens to get access to cheap goods. Those folks in India can work for less money per month than folks in the US because their cost of living, (the goods and shelter the need to survive) are proportionately much lower. The issue people have with the current system in the US is that the wages are being driven down without a proportional lowering of the cost of living.
Globalisation should in theory equalise both wages and the cost of goods around the world. (Or at least in all countries that are participating the global market.) The truth of the matter is that globalisation only equalises wages; not goods.
Capitalism only works when everyone plays the game according to certain rules. One of those is reinvestment. Those who are in charge of megopolies at the top have long ago ceased reinvesting in the economy. The game now is simply to see which rich person can remove the most energy from the system. The bottom 99% of society are desperately scrambling to survive on an ever decreasing amount of capital because the plutonomists of the top 1% are not only removing everything the can from the system, but have a vested interest in preventing anyone from discovering new ways to inject energy/capital into the system. It worked fine when the US could create more energy at the bottom than was being sucked out at the top; but this relied entirely on being able to destroy the environment. Not only that; other countries than the US actually have industry and stable economies; the US has real competition.
The world has changed since the 1950s; grow up and move on. Cooperation and competition need to work hand in hand for any country to survive; neither is foundation enough on it’s own for a civilisation of any size, much less an empire.
Dazed and Confused indeed
I think you missed the bit that read:
"So, instead of keeping prices artificially high, this practice keeps costs artificially low."
It does keep prices down but it does this by keeping costs lower than the market rate should be. Is that a legitimate tactic for a free market economy?
Does the customer benefit from preventing the talent to move about in response to market forces? Is this conspiring to fix prices - low or high? Is this acceptable?
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