Linked by Thom Holwerda on Fri 24th Jan 2014 10:22 UTC
In the News

In early 2005, as demand for Silicon Valley engineers began booming, Apple's Steve Jobs sealed a secret and illegal pact with Google's Eric Schmidt to artificially push their workers wages lower by agreeing not to recruit each other's employees, sharing wage scale information, and punishing violators. On February 27, 2005, Bill Campbell, a member of Apple's board of directors and senior advisor to Google, emailed Jobs to confirm that Eric Schmidt "got directly involved and firmly stopped all efforts to recruit anyone from Apple."

Later that year, Schmidt instructed his Sr VP for Business Operation Shona Brown to keep the pact a secret and only share information "verbally, since I don't want to create a paper trail over which we can be sued later?"

This is why I always smile whenever I hear a pundit claim his or her pet company "does no evil" or has "moral standards". Companies are guided by one thing, and one thing alone: money. They have no morals. They have no moral compass. We see evidence of this every single day - whether it's poor working conditions in low-wage countries, scummy tax evasion techniques, or stuff like this, which is essentially robbing hard-working people of their money.

It's important to note, though, that the way companies work in our society has also been a major factor in the development of our wealth, luxury, and scientific progress; so no, it's not all bad. However, I do wish companies would stop spouting the obvious nonsense that they "do no evil" or have "moral standards", when it's clear to everyone with more than two brain cells to rub together that that's just a bunch of marketing bullshit. I really feel for the people that actually believe that nonsense.

Of course, the criminals responsible for the illegal behaviour described in the article should be put behind bars. Sadly, that won't happen.

Order by: Score:
Come on...
by Kochise on Fri 24th Jan 2014 10:37 UTC
Kochise
Member since:
2006-03-03

Don't be Dr Evil...

http ://makeameme.org/media/created/why-are-they-w7mtwb.jpg

Kochise

Reply Score: 5

Umm...
by Morgan on Fri 24th Jan 2014 11:56 UTC
Morgan
Member since:
2005-06-29

It's important to note, though, that the way companies work in our society has also been a major factor in the development of our wealth, luxury, and scientific progress; so no, it's not all bad.


If it's on the backs of the poor and the hard-working, yes, it's all bad. Making oneself wealthy at the expense of another person's quality of life is never, ever right, no matter how you spin it.

Reply Score: 9

RE: Umm...
by allanregistos on Sat 25th Jan 2014 00:15 UTC in reply to "Umm..."
allanregistos Member since:
2011-02-10

I remember this google+ post:
How in the world could a man enjoy being awakened at 4:30 a.m. by an alarm clock, leap out of bed, dress, force-feed, _, _ brush teeth and hair, and fight traffic to get to a place where essentially you made lots of money for somebody else and were asked to be grateful for the opportunity to do so?
- Charles Bukowski

(Note: Time in the quote is 6:30, but many employees woke up @ 3:00 AM or 4:00 AM.)

Reply Score: 3

Thinking deeper
by Tony Swash on Fri 24th Jan 2014 12:02 UTC
Tony Swash
Member since:
2009-08-22

This is why I always smile whenever I hear a pundit claim his or her pet company "does no evil" or has "moral standards". Companies are guided by one thing, and one thing alone: money. They have no morals. They have no moral compass.


That may well be true but it doesn't really help us understand much about the differences between companies.

It’s true that the function of all companies is to make money and it’s also true that if they don’t make money then, eventually, they will disappear so making money is not really optional. However not all companies, even those making more or less the same products, are the same. And it’s how one thinks about and analyses the differences between companies that is interesting.

Understanding companies, and why company A is different to company B, requires understanding what the fundamental business model of a company is and what it’s internal corporate culture is. By corporate culture I mean the internal life of a company, it’s customary way of making decisions, it’s structure, it’s methods for deciding which of it’s employees flourishes and which does not, it’s management structures, it’s mechanism for deciding priorities, etc etc.

Sometimes it’s own corporate culture can militate against the very business model of a company. For example if a company is trying to sell into a market that consists of products that offer highly integrated experiences to end users but is organised internally in such a way that different internal divisional corporate fiefdoms compete against each other for resources and power then it may be impossible to make the sort of integrated products that can successful compete in the chosen market.

Even within the same market different business models can have a profound impact on the behaviour and performance of a company. For example if the business model of a company is to sell as many different types of products as possible at the cheapest possible price (i.e. to compete largely on price) that would produce a different pattern of corporate behaviour over time to a company that has a business model that focuses on making a few products which maximises customer satisfaction. I am sure both companies are capable of doing ‘bad’ things or being ‘evil’ but such terminology is a trivial and ultimately unhelpful way of trying to understand the dynamics of different companies over time. And both companies could fail to successfully implement their chosen business model if their corporate culture is inappropriate. For example a company could seek to sell products that maximise customer satisfaction but fail to do so because it’s internal structure is dysfunctional and it makes bad products.

So although all companies are chasing sales and profits not all companies are the same. Returning to my imaginary pair of companies, the business model of the first will probably tend to lead to a lower quality product and the latter a higher quality product. That of course doesn’t mean the latter will succeed, it might be that customers are mostly only concerned about price and/or the difference between a well made and not so well made product is too trivial to make a difference.

What’s interesting about about the current period in the big tech markets is how different the business models and internal corporate cultures of the big players are are. Google, Microsoft, Apple, Samsung, Facebook, Amazon, all have very different business models and also have different internal cultures, and therefore have different patterns of corporate behaviour over time. Teasing out the differences is what is really challenging but by far the most interesting exercise.

Reply Score: 1

RE: Thinking deeper
by BallmerKnowsBest on Fri 24th Jan 2014 15:24 UTC in reply to "Thinking deeper"
BallmerKnowsBest Member since:
2008-06-02

Returning to my imaginary pair of companies, the business model of the first will probably tend to lead to a lower quality product and the latter a higher quality product. That of course doesn’t mean the latter will succeed, it might be that customers are mostly only concerned about price and/or the difference between a well made and not so well made product is too trivial to make a difference.


Oh yes, those completely imaginary companies that certainly aren't thinly-veiled stand-ins for Google and Apple. I guess this is the evolution of your "OMG Advertising Company!" talking point? Sorry, but your attempts to dance around the point are only slightly less transparent than stating it directly.

I do have to give you some credit, though: a Strawman argument disguised as a thought experiment is an interesting twist!

Reply Score: 4

RE[2]: Thinking deeper
by Tony Swash on Fri 24th Jan 2014 17:49 UTC in reply to "RE: Thinking deeper"
Tony Swash Member since:
2009-08-22

Oh yes, those completely imaginary companies that certainly aren't thinly-veiled stand-ins for Google and Apple. I guess this is the evolution of your "OMG Advertising Company!" talking point? Sorry, but your attempts to dance around the point are only slightly less transparent than stating it directly.

I do have to give you some credit, though: a Strawman argument disguised as a thought experiment is an interesting twist!


I am not sure quite why are so agitated by my comment and I am also not sure what your response to my comment is actually saying. Do you think that the business models and corporate culture of large companies are not good predictors of their behaviour and if so what is?

As for seeing Google and Apple in my business model examples, I can see how you could see Apple but not how you could see Google in anything I wrote. Google’s business model and it’s corporate culture (as much as I can judge) is nothing like any of the business model examples that I listed.

Reply Score: 3

Money is clout, not value
by Dasher42 on Fri 24th Jan 2014 12:07 UTC
Dasher42
Member since:
2007-04-05

Money measures clout, not value.

This is a case in point; Silicon Valley engineers making six-digit figures are really just workers in a field the feudal/neoliberal system is a few paces behind in grinding down, compared to elsewhere. The dynamic is the same. Legally, or in this case illegally, wealthy insiders rig the market in their favor and undermine anyone else's chances to negotiate. They rig markets to make themselves privileged middlemen and laws to protect their doing what others get punished for. It is a feedback loop; more wealth and power means more power to insiders co-conspiring to get more wealth and power for the next go-around, and the process repeats in a march towards feudalism. When the dwindling numbers of well-paid workers believe the system works, I believe their confidence is misplaced, and their solidarity rightfully belongs with other workers, not the money.

Engineers are subject to the same forces that make most workers around the world struggle to survive, get people as valuable as teachers reduced to poverty, get rainforests cut down, get oceans polluted with oil and radiation, get mountains blown apart and left as heaps of toxic rubble. In every case, the insiders have extracted the wealth and left the rest of the world with the consequences, leaving the playing field even more tilted for the next go-around. Build a time machine in your mind, now, and try and see that being okay ten, twenty, or a hundred years down the road.

Reply Score: 8

RE: Money is clout, not value
by StuS on Fri 24th Jan 2014 17:02 UTC in reply to "Money is clout, not value"
StuS Member since:
2012-12-01

Not as far behind as you think... low six figures doesn't buy you much in the valley - check out housing prices around tech companies some time.. The numbers sound nice, but the lifestyle isn't what you would think (except maybe for young college grads or the older ones who never grew up, more interested in partying and socializing with cooworkers than making a difference in someone's life)

Reply Score: 2

RE: Money is clout, not value
by Tony Swash on Fri 24th Jan 2014 18:19 UTC in reply to "Money is clout, not value"
Tony Swash Member since:
2009-08-22

Engineers are subject to the same forces that make most workers around the world struggle to survive, get people as valuable as teachers reduced to poverty, get rainforests cut down, get oceans polluted with oil and radiation, get mountains blown apart and left as heaps of toxic rubble. In every case, the insiders have extracted the wealth and left the rest of the world with the consequences, leaving the playing field even more tilted for the next go-around. Build a time machine in your mind, now, and try and see that being okay ten, twenty, or a hundred years down the road.


I don't know where this ridiculous culture of pessimism came from or how it became so prevalent. A simple glance at the statistics of life on this planet would show that the last fifty years has seen the biggest improvement in the welfare of more people than at any other time in history. Things are not just better than than they were fifty years ago but massively so and all the trends of human welfare are moving clearly in a positive direction so all the evidence suggests that the improvements will continue into the future.

To give three examples of how well the human race is doing.

Global average life expectancy is now over 70 years.

The global average of the number of babies born per women is 2.5 and falling.

The current level of global adult literacy is 83%.

Considering what those same measures would have shown just a generation demonstrates just what massive progress has been made.

I suggest you have a look at the wonderful work of the Swedish statistician Hans Rosling and his Gapminder methodology for tracking changes in global statistics. I think you will be surprised at just how well the human race, and the planet, is doing.

Reply Score: 1

RE[2]: Money is clout, not value
by zima on Fri 31st Jan 2014 23:58 UTC in reply to "RE: Money is clout, not value"
zima Member since:
2005-07-06

The planet isn't doing that great, our development is at a great cost, far from sustainable. Also, we're in the middle of one of the largest and most sudden mass extinction events, compared by scientists to the Cretaceous-Tertiary extinction event in its destruction of the natural order.

http://en.wikipedia.org/wiki/Planetary_boundaries
http://www.colorado.edu/AmStudies/lewis/ecology/planetbound.htm
http://en.wikipedia.org/wiki/Holocene_extinction

Edited 2014-02-01 00:04 UTC

Reply Score: 2

No
by Soulbender on Fri 24th Jan 2014 12:56 UTC
Soulbender
Member since:
2005-08-18

Companies are guided by one thing, and one thing alone: money.


That's not entirely true. There are many smaller companies that care about other things than raw profit. You probably want to say "Large multinational corporations" instead of generalizing to all companies.

Reply Score: 4

RE: No
by Carewolf on Fri 24th Jan 2014 13:09 UTC in reply to "No"
Carewolf Member since:
2005-09-08

Even large multinational companies can be motivated by other things than just profits, though it requires rather special setups that few founders manage to get in place before they die, some examples exists though: Carlsberg for instance exists to fund and promote research, arts and sports besides the making of good beer: https://en.wikipedia.org/wiki/Carlsberg_Foundation

Reply Score: 4

RE: No
by drcoldfoot on Fri 24th Jan 2014 15:19 UTC in reply to "No"
drcoldfoot Member since:
2006-08-25

And they usually get bought out by said larger company or go public and the rules change.

Edited 2014-01-24 15:20 UTC

Reply Score: 3

Other example
by dsmogor on Sun 26th Jan 2014 16:38 UTC in reply to "No"
dsmogor Member since:
2005-09-01

http://en.wikipedia.org/wiki/Mondragon_Corporation
Though recently they are under a lot of pressure from global competition trying to stick to the core values.

Reply Score: 3

So what else is new
by bfr99 on Fri 24th Jan 2014 13:07 UTC
bfr99
Member since:
2007-03-15

The relationship between management and labor was described long ago in elegant 18th century prose by Adam Smith. Some relevant quotes:
"Our merchants and masters complain much of the bad effects of high wages in raising the price and lessening the sale of goods. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
----In this case a conspiracy against their own employees---.

Reply Score: 11

Why do we insist on that?
by martini on Fri 24th Jan 2014 13:12 UTC
martini
Member since:
2006-01-23

A company needs to be legal, needs to have a good working environment, needs to be moral, but his final goal is to make money. Because that is the goal of an enterprise on the capitalism system.

Money is the score that tells you if you company is fine or not. Money at the end of the year will tell you to switch the strategy, or continue with the same model.

When you put money on a company and became an investor, what do you expect? ... you expect that the compay is moral, legal, good working enviroment, but if you don't get profits according to the plan, is the company working fine? (Also there is problem when investors want unrealistic profits)

Being moral, treating employee good, working according to the law is part of the path of making profits. You had to mix all of that in a company.

But there are people that creates companies with the only goal of having good working conditions, on that base you better create a foundation or maybe work for a government institution which seeks a non-profitable goal.

One day, hopefully, we will have a Gene Roddenberry's future when money does not have todays value, that day all will change ;)

Reply Score: 4

RE: Why do we insist on that?
by karunko on Fri 24th Jan 2014 15:06 UTC in reply to "Why do we insist on that?"
karunko Member since:
2008-10-28

Because that is the goal of an enterprise on the capitalism system.

Don't you find it hypocritical then that the very same that praise the "free market" are the first to try to cripple it?


RT.

Reply Score: 6

RE[2]: Why do we insist on that?
by martini on Fri 24th Jan 2014 19:17 UTC in reply to "RE: Why do we insist on that?"
martini Member since:
2006-01-23

yes, that's why any illegal behavior needs to be punished by the applicable law.

But I don't think we need to say that companies are evil because they want money, the people inside that companies are the ones that goes mad and that behavior needs to be punished. There is not need to satanize companies and capitalism, that is only the model, people are the ones that misbehaves.

Reply Score: 2

RE[3]: Why do we insist on that?
by hackus on Fri 24th Jan 2014 20:34 UTC in reply to "RE[2]: Why do we insist on that?"
hackus Member since:
2006-06-28

Applicable laws are not the problem.

Nobody is enforcing them because the system has reached such a corrupt state, you would have to throw 90% of the ruling class into prison, or execute them for treason.

History says during these times monumental wars happen or the citizenry is basically hacked to pieces.

Either way the empire dies.

-Hack

Reply Score: 5

reduz
Member since:
2006-02-25

Pacts like this are common every place between major and minor players of most industries. The reason is that this situation can lead to cannibalization, as they put too much control on the hands of employees.

In the short term it seems like it is just a money grab from companies, but in the long term it makes business less viable and affects smaller business and start ups, that can't nearly compete with the giants.

Key people in companies will always ask for as much as they want anyway, this is actually one of those measure for the benefit of the industry in general more than greed.

Reply Score: 1

acobar Member since:
2005-11-15

While I agree on the general situation you describe, there is one thing that keeps stoning a trust on your particular words on this case, CEOs and board of directors push for higher and higher incomes/rewards for nothing but themselves even if their decisions may harm the business they are on in a not so distant future.

What I mean is, if the idea is to protect the industry on its various stages of development, why don't they also put a cap on the management level? Why don't they put rules about when the rewards can be cashed like, for example, 5 years down?

They wouldn't because right now all they care about is short terms rewards and on this context even bright technical heads are seeing as expenses instead of investment.

Reply Score: 6

reduz Member since:
2006-02-25

I think there are countries where there is a law that limits the difference between the minimum and maximum wages by X times, not sure how that works there.

Reply Score: 3

dsmogor Member since:
2005-09-01

This is just supply and demand that all corm bosses pitch under every occasion.
The situation shows who they thing should submit to this economic law.

Reply Score: 2

This should be prosecuted
by Jpoint on Fri 24th Jan 2014 16:54 UTC
Jpoint
Member since:
2013-11-22

Part of a free market is the ability of a person to freely sell his or her labor to the highest bidder. Collusion to prevent this competition is no different than price fixing, and should be aggressively prosecuted.

This is something that should be agreed on across political party lines - whether you are a pro-labor leftist or free-market tea partier.

Reply Score: 1

RE: This should be prosecuted
by bile on Sat 25th Jan 2014 19:43 UTC in reply to "This should be prosecuted"
bile Member since:
2005-07-08

Part of a free market is the ability of a person to freely sell his or her labor to the highest bidder. Collusion to prevent this competition is no different than price fixing, and should be aggressively prosecuted.

This is something that should be agreed on across political party lines - whether you are a pro-labor leftist or free-market tea partier.


And in a free market, just as workers can volutarily organize, so can businesses. Workers move to price fix all the time. So do the governments. I fail to see why you should attack one and not the other. Agreeing not to go after employees of other firms is their business. Just as it's the worker's business to apply or not to them.

If you want to talk about what hurts people's salaries... why not attach the culture of hiding said salaries from one another? That gives a huge advantage to businesses and yet few care to tackle it. How can I know what I'm worth if I can't compare with my peers?

Reply Score: 2

Ideas do matter
by Gone fishing on Fri 24th Jan 2014 17:39 UTC
Gone fishing
Member since:
2006-02-22

It is a truism to say that companies exist to make profit, and compete with each other and this can be at the expense of workers, customers etc. However, ideas do matter, institutions and companies can decide what they think is right or wrong, what is ethical and this can make a difference and is important.

You could apply the same argument to political parties, the purpose of parties is to be in power, they will therefore do anything to get elected, stay in power. Therefore ideas and ethics in political parties are an illusion and make no difference, and are nothing more a marketing, electoral gimmick. That might even be true, sometime even often, but I think it is self evident that sometimes it does matter.

If you take the cynical argument to the extreme then we are all powerless to change our futures, ideas ethics make no difference and the sole decider of our destiny is Adam smiths Invisible hand.

Reply Score: 4

Well that is quite frankly dickish
by lucas_maximus on Fri 24th Jan 2014 18:14 UTC
lucas_maximus
Member since:
2009-08-18

I got shafted by a similar policy in my home town, there was a no poach policy (I didn't know about until after I was employed by), so working in a large organisation almost every IT supplier in the area had a contract with them. Which it made it much more difficult to find a new job.

Reply Score: 3

dsmogor Member since:
2005-09-01

Did you explore what legal options you had?

Edited 2014-01-26 16:42 UTC

Reply Score: 2

lucas_maximus Member since:
2009-08-18

Nope.

Reply Score: 2

Non-compete clause
by WorknMan on Fri 24th Jan 2014 18:16 UTC
WorknMan
Member since:
2005-11-13

This seems very scummy on the surface, but I wonder how much of it has to do with companies not wanting senior employees going to the competition with knowledge of all their secret projects. Not that I'm saying it's right... just a thought.

Reply Score: 3

2 things
by egarland on Fri 24th Jan 2014 18:19 UTC
egarland
Member since:
2005-08-05

> Companies are guided by one thing...

No, there is another thing: the law. Anticompetitive hiring practices are illegal.

Companies would love to collude and avoid competition. It's the surest way to win economically, which is why the entire concept of capitalism is built on the premise that government forces competition and prevents companies from cheating the market system. Anti-competitive hiring is one of the ways to cheat, and it's understandably illegal. The fact that they got caught so long ago and have not been held accountable is the real scandal here.

Reply Score: 4

Not Surprising AT ALL
by hackus on Fri 24th Jan 2014 18:58 UTC
hackus
Member since:
2006-06-28

This has been going on for a long time, way before 2000.

In my opinion we do not have a free market any more.

Look at the distribution of companies to market share. A handful of people control almost the entire market. Now normally when this happens in the past, laws would kick and break up the market again.

Well, those laws have been shut off (illegally) to prevent what is now going to happen.

Or should I say markets?

Every sector: Food, Tech, Banking etc.

It has been consolidated into the hands of the few and people are surprised it is ALL RIGGED?

The entire banking sector for example should all be put in prison.

You know, I find it amazing these people are labled as "brilliant", "innovative" etc. when they form monopolies between themselves and effectively eliminate any competition.

I would also like to point out, that with the economic wealth and power structure we currently have in the USA, we no longer have a free market economy.

We now have a very much Soviet era type of planned economy. I say that on the basis that if you look at the real numbers since the banks collapsed in 2007, there hasn't been any growth.

Paper money is distributed now to corporations from the Federal Reserve in planned amounts through the stock market.

This will eventually not end well for all of you reading this.

-Hack

Reply Score: 6

v Comment by Hae-Yu
by Hae-Yu on Sat 25th Jan 2014 03:52 UTC
RE: Comment by Hae-Yu
by Johann Chua on Sat 25th Jan 2014 12:26 UTC in reply to "Comment by Hae-Yu"
Johann Chua Member since:
2005-07-22

Unions stand up for individual workers. Better working conditions, higher wages, etc. It's kind of pathetic that multi-billion dollar corporations resort to backroom deals to lower workers' wages to become even more profitable.

Reply Score: 4

RE: Comment by Hae-Yu
by JAlexoid on Sat 25th Jan 2014 15:40 UTC in reply to "Comment by Hae-Yu"
JAlexoid Member since:
2009-05-19

What's the difference between what they are alleged to have done and what unions do daily?


Except that unions routinely limit the lower bound, not the upper. This the inverse situation.

Reply Score: 5

not black and white
by TechGeek on Sat 25th Jan 2014 18:21 UTC
TechGeek
Member since:
2006-01-14

While corporations are designed to make money, they are run by people. People are complicated. People make mistakes. And people do have morals. Yes, Google made a policy out of "Don't be evil". Have they made mistakes? Absolutely. But its pretty dickish to point to one instance of a mistake and scoff at their policy without considering all the good things they have also done. We should be encouraging companies to abide by a moral compass, not excusing them because they are companies.

For an example of a company that treats its employees well, look at SAS. They have almost zero turn over because its simply the best place to work you will ever find. Most people who get hired there end up retiring there.

Edited 2014-01-25 18:21 UTC

Reply Score: 2

shameful
by nomoretime on Sat 25th Jan 2014 22:29 UTC
nomoretime
Member since:
2014-01-25

an idea created by the richest person in the world

GATES idea.

The idea was created by Bill Gates

Reply Score: 1

Remarkable
by gigaxbyte80 on Sun 26th Jan 2014 06:59 UTC
gigaxbyte80
Member since:
2013-10-19

Intel and AMD had a similar arrangement back in the 80s
and it was widely known in the industry. But this was also typical for many other reasons...

I bet none of you worked in Silicon Valley when we were eclipsed by the Japanese in Hardware: Harddrive, Semiconductor Memory, and many other business/industries. At the end due to the high employee costs we suffered a dreadful recession of late 80s the Japanese become Number 1 in major markets. Today, even SV isnt as big as it was some 25 years ago.

Yes, Apple and Google did the right thing to keep prices controlled and stable. Why would you be against controlling price inflation.

Reply Score: 0

RE: Remarkable
by Johann Chua on Sun 26th Jan 2014 10:46 UTC in reply to "Remarkable"
Johann Chua Member since:
2005-07-22

So we should totally limit executive compensation, right?

Reply Score: 2

Interesting comparison.
by dsmogor on Sun 26th Jan 2014 16:33 UTC
dsmogor
Member since:
2005-09-01

I've seen an interesting thought experiment in one of french (where else) doc channels where they took values and motivations of a typical contemporary corp and juxtaposed it with values and motivations of a man suffering from clinical psychopathy.
The match was perfect.

Reply Score: 2