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Exclusive: Pando Daily Senior Editor Mark Ames describes how his team uncovered secret internal memos between dozens of tech companies to fix wages for more than a million employees
JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore.
Some of Silicon Valley’s biggest names, like Apple’s Steve Jobs and Google’s Eric Schmidt, were directly involved in a wage-fixing agreement between their companies. That’s according to analysis of confidential internal Google and Apple memos reviewed and published by the news site PandoDaily. They found that it wasn’t just Google and Apple who were guilty, but dozens of other tech companies were also involved, affecting the salaries of more than a million employees.
We’re now joined by the journalist who broke the story, Mark Ames. He is a senior editor at PandoDaily, and he joins us now from New York.
Thank you for joining us, Mark.
MARK AMES, SENIOR EDITOR, PANDODAILY: Thanks for having me on.
DESVARIEUX: So, Mark, give us a sense of the timeline of this story. Walk us through what happened.
AMES: Well, the actual genesis, the earliest genesis of this, oddly enough, is George Lucas of Lucasfilm, who runs a sort of, you know, highly specialized special effects studio in Northern California. And when Steve Jobs back in the mid ’80s, he bought Pixar, which was spun off from Lucasfilm, they came to an agreement, ’cause George Lucas said he didn’t like competition, he didn’t like having to bid for workers and bid up their wages, so they had an agreement not to poach each other’s or cold call or recruit each other’s employees, in order to keep labor costs down. So that’s the early, early genesis.
So cut now to 2005. The tech industry’s starting to really boil over again, and in particular, wages for tech engineers and programmers and so on are skyrocketing through the roof and cutting into earnings. So Steve Jobs goes to Google, which is the big high-flying company at the time in 2005, goes to Google’s Eric Schmidt and Sergey Brin and basically says, you guys are recruiting my guys. If you don’t stop it, we’re going to go to war. And generally war in Apple’s Steve Jobs’ mind means patent infringement lawsuits, frivolous or otherwise.
So the Google guys backed down. They agreed to a non-recruitment, non-solicitation secret agreement. In the emails that have been revealed later in court documents, you can see that Eric Schmidt, CEO at the time, was worried. He understood, clearly, that it was illegal. You’re not allowed to have these cross agreements like this.
But, nevertheless, it started expanding and expanding from there because it worked in their interest. So by 2008, you had, according to internal memos and lists from Apple and Google and–as well as the others, all kinds of companies joining this, essentially, wage suppression or labor market fixing agreement not to cold call, not to recruit each other’s employees, thereby suppressing wages, which would go up if there was open competition for workers, if people could compete for workers. So you had not just the core seven tech companies, which were later sued by the Justice Department in 2009 and ’10 and which are now the subject of a class-action lawsuit–so that’s Adobe, Apple, Google, Intel, Pixar, and Lucasfilm, and Intuit, and also eBay–but eventually it expanded out to include companies that you wouldn’t imagine would be part of this, that wouldn’t be–you know, whose employees wouldn’t be competing, maybe, with tech companies. And that includes Comcast. That includes Clear Channel. It includes WPP, the public relations giant based in London, which has something like 120,000 employees. It includes Microsoft, IBM, which has, you know, well over 400,000 employees worldwide.
So this thing, you know, from what we’re learning, you know, expanded, mushroomed way out of proportion. It’s illegal. It’s a violation of the Sherman Antitrust Act and of the Clayton Antitrust Act. And in 2009, the Department of Justice Antitrust Division opened an investigation into it, stopped it by 2010, and then settled with the seven core companies that I named, led by Apple, Intel, and Google. And then that turned into a class action lawsuit, which was filed in 2011, ’12, and was just finally granted class action status at the end of last year and overcame the final hurdles just in the last couple of months. So it looks to be going forward, the class action lawsuit, in San Jose, in the district court there, beginning in May.
And it’s really a landmark case, because in general, antitrust suits usually target when monopolies or oligopolies, when they fix prices on products, where they fix prices on services or transportation or something. But this is a very rare and landmark case in which companies are being sued under the Sherman Antitrust Act for fixing the labor market and wages and what people are paid.
DESVARIEUX: Mark, there are going to be folks that are going to watch us and say, why should I care? Because these people aren’t struggling financially. I mean, they’re making six figures. I even just read an article about the highest-paying companies, and many of them are in Silicon Valley. So why does this matter in terms of the broader labor market?
AMES: Well, I think there are two reasons why. But first, specifically, in the lawsuit, the lawsuit–and the judge agreed with this–covers 100,000 employees. So these agreements were not just for, you know, programmers and software engineers; they were company-wide, right down to, you know, receptionists and office managers. And even I have–I’ll be writing about this–even a sous-chef in a kitchen can’t openly just take a job with another one of the companies in these agreements. So this isn’t just the highly paid employees.
But I think, you know, you’re right to point that out, because generally highly paid tech employees don’t engender the same kind of pathos that minimum wage workers who are, you know, getting stiffed by their employers, that they might get.
But this is a–ultimately it’s a political issue, and this is about the incredible concentration of power and wealth in very few hands and what happens when you have that concentration of wealth and power. I mean, we’ve talked about it a lot. We know it’s bad. We know that it, you know, disproportionately influences politics.
But here’s another way that this impacts our lives. These guys, a handful of guys, CEOs, get together in their cross-board relationships–a lot of these guys are on each other’s board of directors. Like, Eric Schmidt was on Apple’s board of directors and Apple, and Intuit’s chairman was on Apple’s board of directors and a Google special adviser. These guys work out these deals and impact not just, you know, the working-class people’s lives, but even middle and upper-middle class people as well.
And, you know, we talk about the 99 percent versus the one percent, or, really, the 0.1 percent. This is a perfect, I think, example of how politically we are really all in the same boat, so long as we tolerate so much power and wealth concentrated in so few hands.
DESVARIEUX: It sounds like an example of companies getting caught red-handed, as well, making these deals. So, Mark, have any of these tech companies actually admitted to wage fixing or any wrongdoing?
AMES: No, and when you speak to them, they still deny it vigorously. And, of course, in the settlements with the Department of Justice, none of the companies, the seven core companies which are now being sued, had to admit to guilt or that they broke any laws, which is typical, as we know, of all the agreements and settlements, certainly since the Clinton years, with Wall Street. Every time Wall Street does something egregious, violates the law, I mean, there hasn’t been a single banker still, you know, jailed for what happened in the 2000s. So this is par for the course. They don’t have to admit to guilt, which, again, makes the bar even higher for a class action lawsuit, because if they didn’t have to admit to guilt in their settlement–granted, we learn a lot from the settlement, we learn a lot from the DOJ’s investigation that can then be used for the class action suit or, you know, used by journalists to find out more. But without that admission of guilt, of course, it also sort of protects the companies and makes it harder for the victims, the plaintiffs, for example, in the class action suit, to sue them.
DESVARIEUX: Alright. Mark Ames, senior editor at PandoDaily, thank you so much for joining us.
AMES: Thanks for having me on.
DESVARIEUX: And thank you for joining us on The Real News Network.
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