Facebook has scuppered Silicon Valley’s salary plans

By on April 24, 2014

Google, Apple, Intel, and Adobe couldn’t stop the one-time upstart spoiling their scheme, proving collusion is inherently unstable.

Some of the world’s biggest tech firms are red-faced today, after emails detailing a pact between companies including Google and Apple not to poach one another’s staff were filed in a case brought against them by as many as 100 000 Silicon Valley employees. However, there is one multi-billion dollar business that gets to keep its nose out of the dirt: Facebook.

“Who should contact Sheryl [Sandberg] or Mark [Zuckerberg] to get a cease-fire? We have to get a truce,” wrote Bill Campbell, chairman of software company Intuit, in an email to Google executives in August 2008.

The emails also show that as far back as 2007, Google co-founder Sergey Brin was worrying about the social network – and not just because it was poaching talent (of which Sandberg is perhaps the most notable example).

“The Facebook phenomenon creates a real retention problem, I now realise, not just because of FB’s direct hiring, but the more insidious effect that everyone wants to start the next Facebook or get rich by having a popular fb app,” Brin said to colleagues.

A reminder that Facebook was once a fast-growing start-up, although already feared by older tech firms, perhaps remembering they were once astronomically expanding newbies themselves.

The emails also appear to show Google and Apple’s founders right up to their necks in the agreement not to go after one another’s staff (which the claimants are arguing kept their salaries suppressed). An email sent by Brin to the search giant’s executives in February 2005 says Apple co-founder Steve Jobs called him to threaten, “If you hire a single one of these people, that means war.”

Brin said Jobs was being “just kind of crazy” in a deposition for the case, according to the Wall Street Journal. However, the paper trail suggests the plan went far deeper than the Mac maverick’s whims – one email filed with the court indicates a Google recruiter was fired after Jobs kicked up a fuss about an Apple employee being approached.

However, collusion, as is alleged to have taken place between Apple and Google, who have locked horns in some of the tech world’s innumerable patent battles, can never last. Cosying up to limit competition – be it over salaries or prices – is inherently unstable. Companies always have an incentive to break ranks and undercut their rivals. Alternatively, upstarts always risk spoiling the fun, as Facebook is alleged to. Other than being an undeniably bad thing, collusion usually ends up being bad business.

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