Inside Google

A settlement has been reached in the $3 billion class action lawsuit on behalf of 64,000 high tech workers who charged that Silicon Valley tech titans like Steve Jobs, Eric Schmidt and Sergey Brin illegally conspired to keep their wages down.

Details of the settlement weren’t released, but a joint letter from plaintiffs’ and defendants’ lawyers to federal Judge Lucy Koh was filed Thursday.  The companies agreeing to the settlement include Google, Apple, Intel and Adobe.  Earlier Lucasfilm, Pixar and Intuit, who had also been charged with conspiring to screw their workers had already agreed to pay a combined total of $20 million.

I’m not surprised the companies settled. Once Judge Koh granted class action status, it greatly increased the plaintiffs’ leverage.  Their experts estimated that the conspiracy deprived workers of a total of about $3 billion in wages they would otherwise have earned.  If that estimate had held up through the trial, damages could have been tripled to $9 billion under antitrust law.

Documents  made public in various court filings as the suit moved towards a scheduled May 27 trial made it quite clear salaries in the tech industry were lower than they should be because the highly paid robber baron executives conspired to keep them that way.   Pando Daily, which examined, emails and documents in the case offered these examples of how the tech titans schemed:

In 2007, when Jobs learned that Google tried recruiting one of Apple’s employees, he forwarded the message to Eric Schmidt with a personal comment attached: “I would be very pleased if your recruiting department would stop doing this.”
Within an hour, Google made a “public example” by “terminating” the recruiter in such a manner as to “(hopefully) prevent future occurrences.”
Likewise, when Intel CEO Paul Otellini heard that Google was recruiting their tech staff, he sent a message to Eric Schmidt: “Eric, can you pls help here???”
The next day, Schmidt wrote back to Otellini: “If we find that a recruiter called into Intel, we will terminate the recruiter.”

 

And it’s not like Schmidt didn’t know that what he was doing was wrong. According to Pando Daily, “Later that year, Schmidt instructed his Sr VP for Business Operation Shona Brown to keep the pact a secret and only share information ‘verbally, since I don’t want to create a paper trail over which we can be sued later’”

According to The New York Times, Apple CEO Steve Jobs wrote Google Co-founder Sergey Brin, “If you hire a single one of these people, that means war.”  When he received an email from Schmidt saying Google was firing a recruiter for soliciting Apple employees, Jobs forwarded Schmidt’s note to a top Apple human resources executive with a smiley face, according to Reuters.

With smoking guns like these already on the record, it’s crystal clear the tech robber barons didn’t want more embarrassing information to come out at trial. They don’t want to air any more dirty linen in a case that they were certain to lose.

Interestingly, not every tech titan played along.  Sheryl Sandberg had been at Google and knew of the conspiracy.  She left the Internet giant and now is Facebook’s chief operating officer.  Approached at Facebook to join the conspiracy and agree not to hire Google employees, she refused.

While it’s true that a settlement means the tech robber barons’ dirty linen won’t be further aired in public, there is another more troubling aspect of the case.  The suit is against corporations.  It’s not against the tech titans that actively conspired to screw their workers and seem to have known they were breaking the law.  They’re not being held accountable for anything.  Indeed,  even as details of the conspiracy were becoming clear in court filings, Google Chairman Eric Schmidt was receiving a $106 million bonus.

Google’s board of directors should be ashamed. Instead, Schmidt and his co-conspirators should be looking at time in the slammer.  We need to hold executives liable for breaking the law.