The prominent names that feature in the investigations include technology and internet behemoths Google Inc. (NASDAQ: GOOG, LSE: GGEA), Apple Inc. (NASDAQ: AAPL, LSE: 0HDZ, FWB: APC) and Yahoo! Inc. (NASDAQ: YHOO).
The grey area
The key attention area of the inquiry will be whether these companies have illegitimately connived with each other and agreed not to poach each other’s employees.
Such a practice could lead to keeping the employee salaries artificially low and cutting innovation, allowing these behemoths to unduly hold on to their edge against competitors. This is where the antitrust department would play a crucial role.
To an outsider, the prevalence of a ‘no poach’ agreement in a sector that is always on the lookout for talent seems highly unlikely, however, the veterans of the industry claim that “its not free-for-all” at the Silicon Valley.
Randy Komisar, a partner at the venture capital firm Kleiner Perkins Caufield & Byers said of the hiring practices, “There is a gentlemen’s understanding all over the Valley that, it’s not that you don’t hire, it’s the process by which you hire.” If one were to read between the lines, the statement talks of the enormity of understanding between big corporate houses.
Experts opine that, more often than not, major companies follow and adhere to a tacit concurrence that they will not actively poach employees from each other.
Ken Perluss, a former director for talent acquisition at Yahoo averred, “Most companies have a hands-off list. It tells recruiters, ‘Don’t recruit from this company. They are our partner.’”
The onus of proving that there exists an unequivocal pact amongst the companies that they wouldn’t recruit human resources from rival organizations now lies with the Justice Department.
Scale of investigation
The number of technology companies being investigated may be close to a dozen, revealed a source familiar with the matter, on the condition of anonymity.
A spokesperson from Genentech Inc, the wholly owned subsidiary of Roche Holding AG (SIX: ROG), said, “Our understanding is that a number of companies received this request for information from the U.S. Department of Justice."
Genentech is also said to have been contacted by the Justice Department regarding the probe and is cooperating. Spokespersons for Yahoo and Apple declined to comment on the matter.
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