DOJ Wins Against Silicon Valley, but What's the Point?

The Department of Justice: making America safe for highly paid engineers and executives everywhere!

After more than a year of collecting evidence, the DOJ is settling allegations that several Silicon Valley giants have been restricting their hiring practices in a way that harms employees. The companies were accused of listing places not to call with job offers in order to maintain existing business relationships between them. To wit:

  • Google (Nasdaq: GOOG  ) allegedly had Apple (Nasdaq: AAPL  ) , Intuit (Nasdaq: INTU  ) , and Intel (Nasdaq: INTC  ) on its do-not-call list. Intuit was a special case because that company apparently had no problem cold-calling Google employees with job leads; Google was off-limits territory to the other two.
  • Apple not only reciprocated Google's special treatment but also added Adobe Systems (Nasdaq: ADBE  ) and Walt Disney (NYSE: DIS  ) subsidiary Pixar to the list.

All of these noncompetitive practices are now verboten, and in most cases have already ended. You could argue that some discretion in whom you can call is warranted, given that these companies often compete head-to-head with one another and also collaborate a lot. However, "None of the agreements was limited by geography, job function, product group or time period. Thus, they were broader than reasonably necessary for any collaboration between the companies," the DOJ said.

There's no word on stretching this judgment to apply to the entire IT industry, but I can hear the crackling of crumpled policies falling to the floor across Silicon Valley. It is notable that they are headquartered within about 12 miles of one another, with the notable exception of Pixar hanging out up in Oakland, more than 20 miles away. It's easy to mingle in such close quarters, and California is notoriously lax about enforcing noncompete contracts, so it's easy to see why these companies wanted to implement their own policies to stanch their blood losses.

Then again, Facebook seems to have no qualms about hiring high-priced engineers and executives out of these technology hotbeds and driving up salaries in the process. I'm not exactly crying over top engineers possibly missing the millionaire mark due to restricted hiring policies, but the new free-for-all atmosphere should make the Valley an attractive place to work again.

In the end, I think the DOJ should have deployed these resources elsewhere and gotten some real work done. This was a rather pointless witch hunt. Where do you stand? Spill the beans in the comments below.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, but is always open to some nice cold calls. That's what LinkedIn is for, right? Walt Disney, Google, and Intel are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers choice. Apple, Adobe Systems, and Walt Disney are Motley Fool Stock Advisor recommendations. Motley Fool Options has recommended buying calls on Intel. The Fool owns shares of Apple, Google, and Intel. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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