Legal Geek No. 10 - Do Apple and Google Conspire, After All?

This week, the subject is whether Apple, Google, and other tech giants have conspired to break antitrust laws.

https://archive.org/details/LegalGeekEp10

An initial settlement was announced of a class action lawsuit that had been pending against Apple, Google, Intel, and Adobe since 2011. This lawsuit alleged illegal deals to not hire away each other's employees in an effort to keep salaries down in Silicon Valley.

But does this settlement mean this collusion was actually happening?

As a preliminary matter, a class action lawsuit that extends over a multiple year period can lead to some very extensive discovery of documents and interviews or interrogatories as well. In this pre-trial litigation process, several "smoking gun" e-mails had already been uncovered and made public. Most notably, former CEO's Steve Jobs and Eric Schmidt corresponded about a Google recruiter being fired after soliciting an Apple employee to leave for Google.

In other words, the evidence that came to light does not look good. Rather than go to trial and more publicly have their companies and executives dragged through the litigation mud, these high tech giants are cutting the potential losses by paying some amount to the class of employees, but this payment is certainly far less than the $3 billion of damages sought.

For example, Lucasfilm, Pixar, and Intuit were also defendants in this lawsuit but they settled last year for a total of $20 million between them.

This class action followed a Department of Justice investigation in 2010, where all these companies had to agree to stop using backroom agreements to not compete with one another in the employee market. Thus, at least as recently as a few years ago, these companies were almost certainly acting as a cartel of sorts, at least for this limited purpose, and that restraint of trade is not legal under federal and state antitrust laws.

Bottom Line: Although these companies do love to battle in court when it comes to competing patents, the competition does apparently stop when it inures to the mutual benefit and profit margins of all involved. Hopefully the DOJ investigation and this class action payday will discourage such practices from happening again in the future.