In Silicon Valley’s white-hot competition for tech talent, programmers can face a daily barrage of calls from recruiters seeking to woo them to rival companies with offers of better pay and perks.
But workers for some of the biggest names in the business claim their phones fell silent because of a conspiracy among their employers. And they claim the world’s biggest tech icon was at the center.
A lawsuit filed in federal court in San Jose claims senior executives at Google Inc., Intel Corp., Adobe Systems Inc., Intuit Inc., Lucasfilm Ltd., Pixar and Apple Inc. violated antitrust laws by entering into secret anti-poaching agreements not to hire each other’s best workers. In doing so, the suit contends the companies were able to keep wages artificially low by preventing bidding wars for the best employees.
The plaintiffs also claim that company e-mails show Steve Jobs himself sought and orchestrated at least some of the so-called “gentlemen’s agreements” while Apple’s CEO.
“I believe we have a policy of no recruiting from Apple,” then-Google chief executive Eric Schmidt wrote in a 2007 email cited by the plaintiffs. The email was originally furnished to the U.S. Justice Department, which investigated similar allegations in 2010. The same email included a forwarded message from Jobs complaining that Google’s recruiting department was trying to lure away an Apple engineer.
“Can you get this stopped and let me know why this is happening?” Schmidt wrote. Google’s director of staffing replied that the recruiter “will be terminated within the hour.”
The companies’ attorneys said the facts even as presented by the plaintiffs show no evidence of a conspiracy.
Rather, they said in court filings that some companies had separate one-to-one pacts among themselves as they worked together on various business ventures.
“The obvious explanation for the existence of these agreements were the collaborations,” said Apple defense attorney George Riley, as the two sides squared off Thursday in U.S. District Court in San Jose. Riley told Judge Lucy Koh that such arrangements were common.
The case hinges on a practice described in court documents as “cold-calling.” Under the practice, recruiters from one company will call an employee at another company who has the skills the company needs. The practice can lead to bidding wars as workers play the companies off one another to get the highest pay.
Cold-calling, the suit contends, helps workers get a sense of what they’re worth in a free market for employment in which all the companies are competing against one another for top employees. When the cold-calling stops, workers lose the knowledge and the leverage they could otherwise use to demand higher pay.
The Justice Department’s 2010 investigation included all the same companies except Lucasfilm, and the plaintiffs in some ways mimic the language from the department’s original case. The companies settled without admitting any wrongdoing but agreed not to enter into future agreements preventing them from cold-calling each other’s employees to recruit them.
Because the Justice Department’s case was settled quietly without any public dispute, court records contain little detail about any specific alleged agreements among companies.
Some of those details did come to light, however, in a recent filing by the plaintiffs, which quotes emails they obtained from the companies that had previously been given to the Justice Department business cards.
In a 2005 email describing a purported agreement between former Adobe CEO Bruce Chizen and his then-counterpart at Apple, an Adobe human resources executive wrote: “Bruce and Steve Jobs have an agreement that we are not to solicit ANY Apple employees, and vice versa,” according to court documents.
Ex-Palm Inc. CEO Ed Colligan wrote to Jobs in 2007: “Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” the plaintiffs’ filing said.
In internal company communications, Intel CEO and Google board member Paul Otellini described a gentleman’s agreement between the two companies: “Let me clarify. We have nothing signed. We have a handshake `no recruit’” between himself and then-Google CEO Schmidt. “I would not like this broadly known.”
Defense attorneys contend the emails are being distorted by the plaintiffs and show nothing beyond legitimate one-to-one agreements. Apple declined to comment.
“Intel disagrees with the allegations contained in the private litigation related to recruiting practices and plans to conduct a vigorous defense,” said Sumner Lemon, an Intel spokesman.
Adobe said the company does not comment on pending litigation.
The other companies named in the suit did not immediately respond to requests seeking comment.
Whichever side prevails, the case underscores the high wages talented tech workers can command in Silicon Valley, where the tech industry added thousands of jobs last year. According to federal labor statistics, mid-level tech workers in the region such as computer security specialists, web developers and network architects earn more money than anywhere else in the country, with average annual salaries topping $110,000.
Many of those workers could get thousands more if the case goes their way, lead plaintiff’s attorney Joseph Saveri said. Given the potentially tens of thousands of workers affected if the plaintiffs succeed in turning the suit into a class-action case, Saveri said the combined damages for the companies could reach into the hundreds of millions of dollars if decided at trial.
Such penalties would sink many companies. But Apple recently reported cash reserves of more than $97 billion. Google also has billions in cash on hand.
One anti-trust attorney not involved in the case doubts the companies have much to worry about anyway.
Antitrust cases that revolve around hiring practices are difficult to win, said David Balto, a Washington, D.C.-based antitrust lawyer who investigated Microsoft as a staff attorney for the Federal Trade Commission in the 1990s. Among the legal challenges they face is defining who exactly makes up the class of workers harmed by the alleged violations, since people with different jobs have different employment options, he said.
“I don’t think anybody at these companies is losing a nanosecond of sleep because of this lawsuit,” Balto said.
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Freddie Mac is in the spotlight of the Republican presidential contest, as Mitt Romney attacks Newt Gingrich for his 2006 work for the mortgage finance firm.
But what the firm did, and the role it and larger rival Fannie Mae played in the housing crisis of the last decade, remain a source of confusion for many Americans.
What do Freddie Mac and Fannie Mae do? The two of them support the housing industry by providing billions in financing to the mortgage market.
They buy mortgage loans from lenders that conformed to their guidelines, typically safer loans with a large down payment, good credit scores for the borrowers and verification of their income.
Because there is an implicit guarantee that the federal government stands behind both firms, which were set up by Congress, they borrow money at the lowest possible rates and get a good return on their investment.
Did the two firms create the housing bubble that caused the financial meltdown? Not really.
The two firms were major players in the mortgage market, and so the rising home values were at least partly funded by their flow of money.
But the bubble really inflated when Wall Street started buying riskier loans made to borrowers who didn’t qualify for a Fannie or Freddie conforming loan. Those loans carried higher interest rates, with relatively little risk for investors while home prices were going up.
Experts say it was the growth of those riskier loans that caused home prices to rise and the bubble to inflate.
"When you bring in 5 million marginal buyers who under normal circumstances would not qualify for a mortgage, that’s what ends up driving home prices," said Barry Ritholtz, CEO of Fusion IQ.
He said the big Wall Street firms that became major players in the mortgage market, such as Citibank (, Fortune 500), Bank of America (, Fortune 500), Goldman Sachs (, Fortune 500), Morgan Stanley (, Fortune 500) and AIG (, Fortune 500), are as or more guilty than Freddie and Fannie.
"If Freddie and Fannie never existed, we would have had the same problem," he said.
What caused problems for Fannie and Freddie? By the middle of the last decade, Freddie and Fannie had lost their dominant position in the home loan market, as the riskier loans became a larger share of the mortgage market.
So they adjusted their underwriting standards in order to participate in the riskier lending as well.
Obama’s housing track record
Even though the riskier loans were a minority of the loans each purchased, because each was so huge, they ended up with a large volume of those loans.
They also were relatively late to the game. That meant they got into riskier loans right before the decline in home prices — which began in 2006 — led to a spike in foreclosures. After that, home buyers started to default on loans that were safer, adding to Freddie and Fannie’s losses.
"What killed Fannie and Freddie is the housing market went to hell and they were 100% exposed to housing," said Jaret Seiberg, analyst with Guggenheim Washington Research Group.
How much money did the collapse cost taxpayers? So far Freddie has received $72.2 billion from Treasury, while Fannie, which is larger, received $111.6 billion. The combined $183.8 billion makes it the most expensive bailout by taxpayers of the financial crisis. But part of that bailout has been repaid to taxpayers in the form of dividends. Freddie has repaid $14.9 billion, while Fannie paid $17.2 billion.
Seiberg said that the bailout might have been avoided, or been relatively minor, if Fannie and Freddie had stayed away from the riskier loans.
"Best-case scenario would have been they were knocked down, but not knocked out," he said.
Why did Freddie and Fannie hire Washington insiders such as Newt Gingrich?Gingrich’s contract with Freddie is short on specifics of the work he performed for $25,000 a month. But even if he did no lobbying, as he says, the contract came at a time when Freddie and Fannie were eager to buy as much Washington influence as possible.
For years, the two firms were among the most powerful companies in terms of Washington muscle, getting free reign from both Congress and their regulator, then known as the Office of Federal Housing Enterprise Oversight (OFHEO).
"Fannie and Freddie had Congress wrapped around their fingers," said Guy Cecala, CEO of Inside Mortgage Finance, which publishes trade publications following the mortgage market. "They were untouchable."
Because of the public-private nature of their charters, the firms wanted to make sure Congress and OFHEO allowed them to operate with few restrictions. But they also wanted to keep government’s implicit backing in place so they could borrow money cheaply.
"They were very aggressive lobbying Congress and OFHEO to stay out of their way," said Ritholtz.
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Vancouver displaced Sydney as the least-affordable housing market after Hong Kong among large English-speaking cities, as home prices rose faster than incomes, a study of 325 metropolitan areas worldwide showed.
Vancouver
Canada is looking at alternatives for exporting its oil since U.S. President Barack Obama announced he was blocking a pipeline from Alberta to Texas.
A pipeline executive said Thursday that the company was weighing whether to build a segment of the line _ from Oklahoma to Texas _ that wouldn’t require U.S. State Department approval. And government officials said Canada would push harder for a pipeline to the Pacific Coast, where oil could be shipped to China.
At the same time, Canadian officials said, they are hopeful the 1,700-mile (2,740-kilometer) Keystone XL pipeline will be built.
Alberta Premier Alison Redford, the leader of the Canadian province that has the world’s third-largest reserves of oil, said that while Canada is disappointed at Obama’s decision, the government believes Obama has made it clear the U.S. would consider a new Keystone XL pipeline application with a new routing.
Obama called Prime Minister Stephen Harper to explain that the decision on Wednesday was not on the merits of the pipeline but rather on the “arbitrary nature” of a Feb. 21 deadline set by Republican legislators as part of a tax measure he signed, Harper’s office said.
“The fact that the president has said that the decision was not based on the merits we take as a signal that there is an opportunity to make a decision that is in the national interest that allows the project to go ahead,” Redford told The Associated Press in a telephone interview.
Calgary-based TransCanada Corp., which proposed the pipeline, said Thursday it was considering building the pipeline in segments, with the first connecting an existing pipeline in Oklahoma to refineries in Texas.
The Obama administration had suggested development of an Oklahoma-to-Texas line to alleviate an oil glut at a Cushing, Oklahoma, storage hub.
“If our shippers are interested in building that portion of the pipeline (first), we would look at that,” TransCanada President and CEO Russ Girling told The Associated Press in an interview.
Obama’s rejection of Keystone XL “clearly gives flexibility to do that,” Girling said. He emphasized that the company had made no decisions.
U.S. officials have said that building the pipeline in sections could speed up the process since the U.S. State Department would not be involved if the pipeline does not cross the U.S.-Canada border.
Girling’s remarks were in contrast to a statement TransCanada issued on Wednesday declaring it would reapply for a presidential permit to build the full pipeline. Girling said the company still expects to reapply, but “will take our time for how to refile it.”
He said a new route that avoids environmentally sensitive areas of Nebraska should be made public in a matter of weeks
In Washington, the proposed $7 billion pipeline has become a political hot potato.
Republicans _ who earlier put the president in the awkward position of having to make a decision on it before Feb. 21 _ now hope to force Obama to deal with it yet again before next November’s presidential election. He wants to put it off beyond that.
Republicans are looking to drive a wedge between Obama and two key Democratic constituencies. Some labor unions support the pipeline as a job creator, while environmentalists fear it could lead to an oil spill disaster.
The Alberta-to-Texas pipeline proposed by TransCanada would carry 800,000 barrels of oil a day from Alberta across six U.S. states to the Texas Gulf Coast, which has numerous refineries.
Natural Resource Minister Joe Oliver said it’s clear the process is not yet over and said Canada is hopeful the pipeline will be accepted on its merits.
Redford said Obama’s decision adds urgency to Enbridge’s proposed pipeline to the Pacific Coast of British Columbia that would allow Canadian oil to be shipped to Asia for the first time.
The project is undergoing a regulatory review in Canada.
“Asian markets are a very viable alternative. I say alternative, I probably shouldn’t. It’s not an either or situation. There’s an opportunity here for us to grow our markets in both directions and we’d like to be able to do that,” Redford said.
Canadian officials see the pipeline to the Pacific coast as critical as Canada seeks to diversify its energy customer base beyond the United States, which Canada relies on for 97 percent of its energy exports.
Alberta has more than 170 billion barrels of oil reserves. Daily production of 1.5 million barrels from the oil sands is expected to increase to 3.7 million in 2025. Only Saudi Arabia and Venezuela have more reserves.
Sinopec, a Chinese state-controlled oil company, has a stake in Enbridge’s proposed $5.5 billion Northern Gateway Pipeline. Chinese state-owned companies also have invested more than $16 billion in the oil sands in the last two years.
Tens of billions more are expected to be invested in Canada’s oil sands if the Pacific pipeline is built.
There is fierce environmental and aboriginal opposition to the Pacific pipeline, but Harper’s government has called it a nation-building project that is crucial to the country’s goal of becoming an energy super power.
Taiwan
President Hugo Chavez defended his close ally Iranian leader Mahmoud Ahmadinejad on Monday and warned of “U.S. warmongering threats” amid tensions over Tehran’s nuclear program and a death sentence against an American man convicted of working for the CIA.
The two leaders met in Caracas on the first leg of a four-nation tour that will also take Ahmadinejad to Nicaragua, Cuba and Ecuador.
“We are very worried,” Chavez said of the pressures being put on Iran by the United States and its allies, which he accused of being a threat to peace.
“They present us as aggressors,” he said during an earlier break in his talks with his Iranian counterpart at the presidential palace.
“Iran hasn’t invaded anyone,” he added. “Who has dropped thousands and thousands of bombs … including atomic bombs?”
Ahmadinejad’s visit comes after the U.S. imposed tougher sanctions against Iran over its nuclear program, which Washington believes Tehran is using to develop atomic weapons. Chavez and his allies back Iran in arguing the nuclear program is purely for peaceful purposes.
Adding to the tensions, Iranian state radio reported on Monday that a court in Iran has convicted dual U.S.-Iranian citizen Amir Mirzaei Hekmati of working for the CIA and sentenced him to death.
Both leaders joked that their relationship shouldn’t cause any concern.
Ahmadinejad said if they were together building anything like a bomb, “the fuel of that bomb is love.”
Chavez played on the same theme in his remarks: “We’s going to work a lot for some bombs, for some missiles, to keep the war going. Our war is against poverty, hunger and underdevelopment.”
The Venezuelan leader said in his nationally broadcast speech that Iranians assistance has helped the South American country build 14,000 homes as well as factories that produce food, tractors and vehicles.
“We will always be together,” Ahmadinejad said through an interpreter. Smiling as he put his hand on Chavez’s arm, the Iranian leader called the Venezuelan president “the champion of fighting against imperialism.”
Later during the leaders’ meeting, two memorandums were signed on promoting cooperation between the two nations in industrial matters and in worker training, officials said.
Iran finds itself under increasing pressure in the standoff over its nuclear program, and in response to the latest U.S. sanctions has threatened to blockade the Strait of Hormuz, an important transit route for oil tanker shipments.
Diplomats on Monday confirmed a report that Iran has begun uranium enrichment at an underground bunker, a development that increases fears among U.S. and European officials about Iran’s nuclear ambitions. Two diplomats spoke to The Associated Press on condition of anonymity because their information was confidential and based on an inspection by the International Atomic Energy Agency.
Chavez’s long-running confrontation with Washington also looks set to grow more antagonistic after the U.S Payday advance. State Department announced, just hours before Ahmadinejad’s arrival, that it was expelling Venezuela’s consul general in Miami, Livia Acosta Noguera, due to allegations that she discussed a possible cyber-attack against the U.S. government.
The expulsion followed an FBI investigation into accusations contained in a documentary aired by the Spanish-language broadcaster Univision last month. According to the documentary, Acosta discussed the possible cyber-attack while she was previously assigned as a diplomat in Mexico. The documentary was based on recordings of conversations with her and other officials, and also alleged that Cuban and Iranian diplomatic missions were involved.
Venezuela’s government had not responded Monday.
Beyond voicing strong criticism of the U.S., Ahmadinejad is also likely to look for ways to use his Latin American alliances to diminish the impact of sanctions on Iran’s oil industry, said Diego Moya-Ocampos, an analyst with consulting firm IHS Global Insight in London.
However, Moya-Ocampos predicted that “Venezuela is going to be very careful not to push its relationship with Iran beyond the U.S. tolerance limits,” so as not to risk being hit with more U.S. sanctions. Last year, the U.S. imposed sanctions on state oil company Petroleos de Venezuela SA for delivering at least two cargoes of oil products to Iran.
The U.S. government has also repeatedly accused Iran of sponsoring terrorism, and growing Iranian diplomatic ties with some Latin American countries have generated worries in Washington.
In Quito, Ecuador, Foreign Minister Ricardo Patino told reporters that Ecuador’s government “has no reason to stop having relations with Iran” and said his country recognizes Iran’s “right to the peaceful use of nuclear energy.”
Argentina, which has good relations with Venezuela, also has warrants out for the arrests of Iran’s defense minister and other officials suspected of involvement in the 1994 bombing of a Jewish center in Buenos Aires that killed 85 people.
The Simon Wiesenthal Center, a Jewish human rights organization based in Los Angeles, urged Ahmadinejad’s hosts to tell Iran that they support Argentina’s demands for the extradition of those implicated in the attack. The organization also condemned Ahmadinejad for threatening Israel, saying in a statement on Monday that “honoring that trafficker of hatred with impunity involves his hosts as accomplices.”
Chavez accuses the U.S. and its allies of wrongly demonizing Iran. On Sunday, he rebuffed calls by U.S. officials for countries to insist that Iran stop defying international efforts to assess its nuclear program.
“What the empire does is make you laugh, in its desperation to do something they won’t be able to do: dominate this world,” Chavez said on television before Ahmadinejad arrived.
Exxon Mobil Corp. and the Norwegian oil producer Statoil have reached an agreement with the federal government that will allow the companies to continue developing a potentially lucrative oil discovery in the Gulf of Mexico.
The government will get more money from Exxon and Statoil as part of the agreement to settle federal lawsuits over their leases in the oil field known as Julia, which is about 250 miles southwest of New Orleans. The proposed settlement was filed in federal court Friday but still must be approved by a judge.
Exxon spokesman Patrick McGinn said Saturday that the settlement will allow the company to develop the resource as quickly as possible. The initial phase of the project is expected to produce more than 175 million barrels of oil from six wells.
Exxon has estimated that the oil field may hold billions of barrels of oil and gas equivalent but it is remote and technically challenging to develop.
Exxon and Statoil have five leases in the field; three signed in 1998 and two in 2003. Each company owns 50 percent interest in the leases.
The dispute began in October 2008, when Exxon applied to extend the leases but the government refused low fee payday loans. It said the company didn’t present a specific production plan. Exxon and Statoil sued the government after losing several appeals.
Under the settlement, the two companies will develop their leases in phases as initially planned with the goal of starting initial production by June 2016.
They also will pay more to the government in exchange for the lease extensions. For example, the companies will pay $11.2 million each year until the three original leases reach at least 87.5 million barrels of total production, McGinn said in an emailed statement.
The agreement also raises the royalty rate on those three leases to 18.75 percent from 12.5 percent, he said. Annual rent on those three leases rose to $11 per acre from $7.50 per acre. The royalty rate for the other two leases is 12.5 percent.
If Exxon and Statoil had lost the lawsuit, the leases would have reverted to the government.
Nobel Prize-winning economist Peter Diamond said U.S. policy makers should focus on fighting long- term unemployment because workers who lose skills present a bigger challenge than the country
The Google+ social network has topped 60 million users, according to Ancestry.com founder Paul Allen, who also made the bold prediction late Tuesday that Google+ would reach 400 million users by the end of 2012.
Allen, who calls himself the "unofficial statistician" of Google+, runs hundreds of queries on various surnames on the social network each week. He has been tracking those names since Google first announced that Google+ had reached 10 million users in July.
Google+, the company’s answer to Facebook, got off to a roaring start, hitting the 10 million mark in just two weeks — and that was even before the site was open to the public.
But growth had tapered off, taking three months to reach 40 million users, according to Google’s numbers.
Google’s hasn’t given a more recent count. But Allen has seen a rapid resurgence, estimating that the service hit 62 million late Tuesday.
"It may be the holidays, the TV commercials, celebrity and brand appeal, or positive word of mouth, or a combination of all these factors, but there is no question that the number of new users signing up for Google+ each day has accelerated markedly in the past several weeks," Allen wrote on his Google+ page.
Google’s (, Fortune 500) social network is now adding 625,000 users each day, Allen said.
At that pace, Google+ would reach nearly 300 million users by the end of 2012. But Allen believes that growth will accelerate, enabling it to hit 400 million.
There’s one crucial missing piece in Allen’s analysis: He only cites the total number of people who have signed up for the network, not the number of people who actually use it. People may sign into the service to check it out and never use it again.
Facebook, by contrast, reports that it has 800 million "active users," which are those users that have viewed a Facebook page or have used an application. Half of all Facebook active users log onto the social network in any given day, the social network says.
Google entices users to sign up in its newly redesigned home page, by making Google+ the first option in an ever-present pull-down menu — an option that sits right above search. It’s unclear how many sign up but then never actually use Google+.
The technology and advertising industries alike are watching Google+ very closely, which could yet prove to be a sizable alternative to Facebook. The project is very important to Google, which is trying to overcome its past miscues in the social networking space.
More people visit Google’s network of websites than Facebook each month, but Facebook is killing Google in categories that advertisers care most about: Time spent and pages viewed.
South Korean consumer confidence fell to a three-month low in December, as concern the political outlook in the North will worsen in the wake of Kim Jong Il
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