How are cold-calling ceasefires illegal?
blog.navarr.me
blog.navarr.me
http://www.justice.gov/atr/public/press_releases/2010/262648...
> The department said that the agreements eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities.
Now, you may not _agree_ that it should be illegal, but the explanation is right there in the document.
Regardless of what you feel about the case I think that's a huge change to the current ecosystem.
This isn't a big of a change to the legal precedents. This type of behavior has been illegal for a long time. This is just the first time that I know of where it's been this public involving media-friendly companies.
No, its not. The idea that nonsolicits are combinations in restraint of trade as prohibited by the Sherman Antitrust Act has nothing at all to do with the California legal rule against noncompetes -- its certainly not a generalization of that rule.
> Regardless of what you feel about the case I think that's a huge change to the current ecosystem.
Its fairly well established that agreements not to compete between firms are generally illegal under the Sherman Act; finding a new exception to that rule would be a bigger change to the current legal climate.
"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."
This applies as much to an agreement among companies not to compete for engineers as it would to an agreement among companies not to compete for any other limited good or service they need to do business. It applies in all states, and has for 124 years.
The company-to-company pacts are suspect enough, as some of the messages in these cases show, that executives feared creating a paper trail.
The company-to-employee agreements are different. Those clauses typically limit an individual from recruiting coworkers to a new employer, for a limited time. As far as I know, these are legal in most places, apparently even in California, and aren't done surreptitiously at all: they're clearly spelled out in employment-related contracts.
(Some of the Pando reporting, in trying to cast some Google documents in the worst possible light, seems confused on this matter. They call a passage that's clearly referring to such employee contractual obligations to former employers as a "a rather cryptic warning suggesting that all across industries, illegal non-solicitation agreements were common everywhere" and "a stunning example of… flagrantly illegal practices". No, that's just referring to a common and legal non-solicitation clause of many employment agreements. See, for example, http://www.pepperlaw.com/publications_update.aspx?ArticleKey... )
That's what I was referring to in my comment above, that if companies can't agree to honor non-solicits, then the non-solicits seem to lose some teeth. Of course the original employer could go after the manager directly, but it certainly seems to weaken them.
Not quite....
> "Not to pursue manager level and above candidates for Product, Sales, or G&A roles — even if they have applied to Google;"
http://pando.com/2014/03/22/revealed-apple-and-googles-wage-...
The author of this post seems to have acknowledged that part was suspect.
Other commenters have pointed out, however, that restricted trade contracts are illegal which is what forms most of the basis of why this is illegal.
I still haven't been convinced it's unethical, but I can see now why it's illegal.
Engineering salaries were likely depressed due to this non–compete cartel.
OPEC can do this with oil since it's not under US jurisdiction. US airlines, for example, cannot phone each other up and say "Let's agree to price JFK-SFO at $500 each way." They can observe what each other charges for a given ticket and make a decision to price their own fare accordingly, but they cannot act in concert.
Even if consider employees salary to fall under that dubious categorization, good luck proving the salaries were "likely depressed" when during that period the salaries went up. A lot.
It seems that it only affected lazy and apathetic engineers i.e. those who couldn't be bother to send out a resume.
Also, if you have a look at the class action filing, the mechanism of action is quite clear.
To lay it out, the way that salaries are set is for any given title (eg: Software Engineer I), there is a pay range. Hiring managers do not have the general permission to go outside the pay band. Under the interests of fairness, these pay bands are adhered to fairly strictly.
So depressing the wages of even a sub-section of the employee pool helps keep the pay band down.
While you may deem this a mere 'theory', there is evidence of it's affects. Specifically that Google was forced to give 10% raises to their entire employee when Facebook would not accede to a cold-call prohibition.
Your final sentence is not very complementary to your fellow engineers - often times engineers are focused on the problem and unaware of their place in the market. To call them lazy and apathetic is pretty mean spirited.
Or loyal and happy ones, which believed the company was paying them market rates.
In any case, if the companies formed a price fixing cartel, they're just as wrong if they failed to have an effect as if they did have an effect - the damage is just smaller if they didn't have an effect.
It would be shockingly unlikely if salaries were not depressed, and that is what's actually obvious.
Under US antitrust law, if you conspire with others in the marketplace to fix prices, you can be prosecuted. Doesn't matter whether you're fixing prices for labor, pizza, cats, photos of cats.
Are you a lawyer? If not, have you asked one? What research have you done to try to figure out how it might be illegal? Have you read any laws or legal articles about the subject matter?
And remember, a free market means the consumer has a right to choose, not the corporation has a right to trick consumers into buying at fixed prices.
In addition to price fixing products, companies also can't wage fix. If corporations were allowed to get together and decide the max they'll all pay certain employees then they can do...well exactly this. Also remember that these companies also refused to hire people who came to them, and also ratted out those employees to their original employer. That goes beyond basic wage fixing and into the realm of heinous employee rights violations.
The main reason all of this is illegal though is because the consumers and the employees are not given all the information they need to decide. The key to this important detail is in how all these sleazy assholes went around telling each other to be quiet. If this action were something that was morally correct they wouldn't need to hide it. However they knew that if the employees knew they'd leave the company and it'd cost more to keep them. That's why the companies kept the information from the employees.
More importantly though, if the consumers know about price fixing, they revolt and entire industries collapse in huge meltdowns and the consumers stop trusting the market. Politicians then react and pass laws against it so that there isn't a huge economic revolt, or worse, a political bloody one.
Then again, programmers seem to worship corporations these days so I got no idea how this will play out. Personally I hope we all boycott the shit out of every company on this list, but that'll never happen as long as coders have their heads firmly planted up Ayn Rand's ass.
The one thing that I'm enjoying coming out is how this is proving to programmers that they are valuable. I think before this coders just kind of thought of their value as just a typical cube farming wage slave. Now they see that they're so valuable that corporations will go to very great lengths to keep them from leaving and from paying them what they're worth.
That is definitely going to be interesting to watch play out.
Is this not how LIBOR or the Fed rate is determined?
The Fed rate is determined by the Fed. Which is a US Government entity. And is its responsibility. So not even remotely close to the same thing
The Fed is not a US Government entity. It operates within rules created by Congress but is not beholden to Congress or any branch of the US Government. The board holds meetings and the Chairman reports to Congress once in a while but they have more or less a free hand in running things.
"As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms."
I really hope this story doesn't die out too quickly, since it should be a crash course for most.
Fantastic way to get hits, I guess.
Relevant xkcd though: https://xkcd.com/1053/
1. Were the individuals at the companies in question knowingly acting outside their own ethics or the ethics they portray themselves as having? Was there something "sinister" about this?
2. What harm did these actions cause and do we need to do something to prevent such kinds of harm in the future?
A lot of #1 sounds like execs trying to manage the relationships with the companies they worked with. It doesn't sound like there was a big taboo around these types of do-not-solicit agreements at that time, and with all the players aggressively trying to hire and hold onto experienced employees I can see how finding out that a partner company was targeting the employees you were trying to keep around could be interpreted as a hostile/unfriendly business move. The most damning thing I've come across regarding #1 was the email about taking the conversation offline to avoid a paper trail. Would love to read more about the context of that.
I wasn't sure about #2 at first, but after all the discussion I've been strongly persuaded that this is a net negative for the software industry. The lawsuits and public outcry will hopefully create a strong taboo against this sort of behavior in the future, in addition to clarifying the legal ramifications. Is there anything more that needs to be done here?
If that's all they did, what would be illegal? How is that price fixing?
That's like saying stores agreeing not to advertise inside each other's premises are a cartel. Those companies can still advertise their openings just not actively poaching each other's employees.
A lot of hires and promotions are made through these sorts of offers. Steve Jobs famously courted John Sculley from Pepsi. Do you think Marissa Mayer applied for her role at Yahoo?
These sort of agreements restrict the market and are unfair to engineers.
So if for example stores advertise massive discounts in front of each other's premises specifically for the customers about to make a purchase at the competing store, then two stores agreeing to stop and go back to simply letting shoppers DO THEIR OWN RESEARCH is a cartel?
Can you elaborate on a specific case? Say Jane is happy at company X, but wants to see if she can get a higher salary. She goes outside or surfs online and bam, company Y is hiring. She INQUIRES and APPLIES and says she wants a higher salary. She is offered this salary by company Y. She quits and gets a higher salary.
Are you saying salaries are depressed from being EVEN HIGHER from companies actively calling employees of other companies so they can disrupt their projects midstream and lure away those employees?
If men actively tried to seduce each other's wives every chance they got, would that improve the deal of the wives?
Jane might be free to offer her services to other companies, but what if she hadn't gone looking? She might not even know it was likely that she could get a better salary, or she might not have spotted a job posting particularly suited to her.
The companies suppressed a form of competition to further their own interests, with the inevitable effect that salaries were also suppressed, because the market was not as competitive as it would otherwise have been. That is illegal, and has been for more than a century.
It's not about offers it's about advertising in unwelcome places. You are claiming that ANY agreement not to engage in unwelcome behavior decreases competition and therefore leads to a worse deal for the other parties. So basically can you take it to its logical conclusion... us agreeing to not destroy each other's reputation through NSA-type sabotage is actually a cartel? Us agreeing not to sabotage each other's operations through corporate espionage before 1995 and other legal means is a cartel?
A good husband/wife shares rewards fairly equally. An employer rarely distributes profit equally.
A good husband/wife team both have a large degree of autonomy and decision making power. In an employee-employer relationship this power predominantly resides with the employer.
A good husband/wife stands by their partner in times of trouble. An employer will happily jettison under-performing employees.
A good husband/wife will sacrifice some level of material comfort in order to help their partner improve themselves. Employers will not provide training etc unless it is in their best short term interests.
Etc etc etc. Fact is jobs are nothing like marriage.
Likewise it is not about advertising in unwelcome places. Google is not advertising to Apple; they are advertising to individuals who happen to work at Apple. The party, Apple, that considers it unwelcome is a third party to the advertising. It is frankly none of their business. It is unwelcome to Apple because it stops them from underpaying their staff.
And finally there is a big difference between actions that enhance the market and allow it to operate efficiently and negative market actions. If you are worth $200,000 to Apple but only $100,000 to Google then it is a better allocation of capital for you to work at Apple. If you are worth that money to Google then they can easily counter offer. This aids market efficiency which is the driver of all our economic growth.
This is completely different from trying to steal key players simply to harm your competition. But stopping this key player theft is actually easy via legal and ethical market mechanisms (e.g. vesting options, bonuses on successful completion of key deliverables, fully funded non-competes, actually paying market wages etc).
And finally there is a big difference between actions that enhance the market and allow it to operate efficiently and negative market actions.
You see, Google and Apple can very easily advertise openings GENERALLY TO EVERYONE, let's say on a job board. Advertising a position doesn't mean you have to offer it to anyone -- this is technically called Invitation to Treat.
Moreover, Google and Apple and any other companies can widely publicize these opportunities. Any employee who is interested in looking around is able to go to a job board or some other marketplace and see the job listings posted there, the same way real estate agents post in MLS.
But just like real estate agents would get real pissed off if rival agents hang around their showings and try to poach their clients, the same is true of companies. (Actually, although you say that marriage is completely different, actually the same mechanisms that lead to jealousy and guarding from 3rd parties are in effect.)
This is completely different from trying to steal key players simply to harm your competition.
THAT IS EXACTLY THE ISSUE.
Basically when companies TARGET specific people in other organizations to lure away, it might not be taken kindly. How do you know that Google isn't trying to lure a key member of the Apple team away and pay them a huge salary boost just so Apple's product is now going to have a harder time competing?
This is after all competition! But who is it good for? It is good for the small number of people who make themselves indispensable in a company. But it destabilizes the very teams that are building the products that help the public, so the vast majority of people is harmed by this practice. Or at the very least it's not clear that they benefit enough to make a law banning agreements to scale back poaching key people.
Much of the time, the distinction between a lawful practice and an unlawful practice is whether two or more companies got together and agreed to engage in the practice. The distinction is important, because independent adoption of a practice by multiple entities is a sign that they are responding to market forces, while collusive adoption of a practice is a sign that they are attempting to distort market forces.
This was unambiguously an attempt to distort market forces.
NO IT ISN'T. Most companies in most industries can hold onto key staff without breaking the law because there are legal mechanisms to keep these staff.
This is about trying to keep an entire category of employees (the ones not currently seeking new opportunities) in the dark about market wages and conditions in an effort to hold down general employee wages.
Keeping your eye on the market takes time and effort; time and effort that I personally would rather spend with my family. So if somebody is willing to actively search the market for employers paying less than market rates and offer those people a job it is a good thing.
But just like real estate agents would get real pissed off if rival agents hang around their showings and try to poach their clients, the same is true of companies.
And while they might get pissed this is basic competition and is good for the market. It helps make sure real estate agents do not price/service gouge their clients. After all if the rival cannot offer a better deal then no harm done.
Actually, although you say that marriage is completely different, actually the same mechanisms that lead to jealousy and guarding from 3rd parties are in effect
You are trying to suggest that because something applies to marriage that it should somehow be ethical in an employer-employee relationship. The leap simply put does not make sense.
Or at the very least it's not clear that they benefit enough to make a law banning agreements to scale back poaching key people.
It is clear that it distorts the market and holds down wages for employees. There are many legal mechanisms to keep key staff. The fact that these companies resorted to illegal means suggests that they were in fact trying to stop the poaching of normal employees and not just "key staff". Again this behavior is bad for the market.
This is about trying to keep an entire category of employees (the ones not currently seeking new opportunities) in the dark about market wages and conditions in an effort to hold down general employee wages.
No it's not. It's easy to find the market salaries today, on glassdoor and other means. You have a very unrealistic opinion of workers if you think that they are "in thee dark" about publicly available information that's easily obtainable until a recruiter finally calls them and informs them that they can get a slightly bigger salary (in fact taking 20% for themselves).
The way I see it is - you can instruct your HR to work only with recruiters, you can instruct the recruiters to not advertise on porn sites because you don't want the reputation cost, and you can ask recruiters not to cold call a rival's employees because you don't want to bear the reprisal cost. This isn't a cartel. A cartel is when you REFUSE TO OFFER a better deal than your competitors thanks to internal agreements. Here you offer whatever you want! You simply are judicious where you advertise it. That is not a cartel sorry. There is no price fixing.
You know if we're going to take this to its logical conclusion, it should be illegal for companies to collude with recruiters and all applicants should be able to bypass a recruiter and apply directly to the company, asking for a 20% greater salary. But somehow many companies I know don't accept such applications. Please tell me why they can collude and not compete with recruiters. Isn't that a REAL cartel since their HR dept will NOT OFFER you a job unless you are referred through a middleman. The HR dept refuses to compete with the recruiter even if you did the work for them and applied! And even if you don't agree this a cartel, it certainly imposes a 20% tax on the salaries of applicants.
It is clear that it distorts the market and holds down wages for employees.
No, regula market operation doesn't distort a market, outside regulation distorts markets. Government regulation distorts markets.
It is also not clear that more successful poaching will drive up wages for employees. It is clear it drives up COSTS of hiring and training employees since poached employees make you start over, delay and cancel projects etc. This may very well lead companies to hire contractors instead or pass on the costs to their OTHER employees - the majority who werent poached successfully - in other ways.
So no it's not clear what companies will do, this isn't basic supply and demand.
I get the feeling you're being rhetorical, but if I remove the tone in my head then: yes, clearly.
> out of control with everyone poaching each other's customers blatantly
Corporations shouldn't own customers... Like, the way you poach one is by offering a better deal (more features, better price, better service, etc). I think the way an economist would see the situation you are describing there is a "functioning market" -- the way that an economy improves customers life.
If AMD releases a new processor and "steals" a ton of Intel customers that's a good thing. The customers get better processors which they use in their own economic contributions. If Intel steals them back by releasing an even better processor, that's also fantastic. If that process repeats it's not "out of control" -- it's the world becoming better.
This dynamic (competition) is the reason why capitalistic societies have done so well in the last two centuries. It's the reason why the quality of the goods you use continues to increase while the price drops.
When corporations make an agreement to stop competing on any dimension, that dimension suffers. Maybe you're saying you don't care about this particular dimension. If that was true in general (ie no consumers care about the dimension), then the agreement wouldn't be necessary since competing on that basis would have no effect.
I can advertise an offer in many places, but just because I agree not to advertise an offer in a particular place (eg right outside a rival movie theater, and vice versa) doesn't mean I don't OFFER something. It may mean that we agree not to degrade the experience for one another's customers.
Are you saying that a world where people are hit with AMD ads as soon as they exit the Intel store is a better world? Well why don't companies go the other way then -- agree to tell each other every time you purchase something and share your purchase data without your consent. I hope you like to receive spam mail every time you buy something, from competitors.
Please explain why men seducing each other's wives at every opportunity would lead to better deals for wives.
Assuming the ad runs profitably, yep. Customers are changing their buying patterns for a reason.
> Well why don't companies go the other way then -- agree to tell each other every time you purchase something and share your purchase data without your consent.
You answered your own question by including "without your consent". The with consent version does happen though -- it's not unheard of for a knowledgable salesperson to recommend a different product than the one they are selling.
> I hope you like to receive spam mail every time you buy something, from competitors.
This is quite a leap from your previous example. Did you grow tired of it?
> Please explain why men seducing each other's wives at every opportunity would lead to better deals for wives.
Please explain why women get remarried.
>Please explain why women get remarried.
Answering a question with a question? This is a non-sequitur. While there are many reasons for women to get remarried, to make your point you have to show that it's better for women when men actively try to seduce each other's wives at every opportunity. After all, women are perfectly capable of discovering other men themselves, especially if the men advertise their availability and offers in various well-known places. The men don't need to cold-call other men's wives specifically trying to poach them. There's a big difference.
Illustrate to me economically why the world where men are specifically cold-calling other men's wives is a better world due to the increased "competition" by men.
If we take this logic even further, perhaps ever-more-clever ways of men sabotaging the others' relationships with their wives would have even BETTER results for the wives, because they are more "competitive"? Doesn't this have diminishing returns?
Not really. The point actually should read "men making an agreement not to flirt with married women would be worse for married women as a whole".
Note this differs from your version in two important ways:
A1. The group that is benefited is not women, but married women
A2. "Every opportunity" is replaced with "where the man in question believes it is a good idea"
And the version with those modifications is clearly true.
High level argument:
B1. the cost to happily married women isn't particularly high (they stay in their relationship, feel flattered, have a fun conversation, etc)
B2. the cost to unhappily married women would be particularly high (since they have less knowledge about potential alternatives / may stay in a bad situation longer due to lack of information)
I'm not sure what the exact population sizes are for those two groups, but by using the divorce rate as a quick proxy we can see it's a high enough ratio to be net positive. Hence it would be better.
(If you are thinking about talking about obnoxious flirting, I will point you to A2 above)
FWIW "Please explain why women get remarried" is just a shorter version of the above argument -- the reason men not flirting with married women is bad for married women as a whole is because some would get remarried.
> If we take this logic even further, perhaps ever-more-clever ways of men sabotaging the others' relationships with their wives would have even BETTER results for the wives, because they are more "competitive"? Doesn't this have diminishing returns?
You talk about straw men in other threads. Do you really not see the straw man in your last two replies to me? No one is arguing that Apple should seek to harm the way that Google's employees feel about Google except in true ways ("Google is paying you 20% less than market" is good if true in much the same way as "Greg is cheating on you" is good if true. Both are of course bad if false)
http://www.youtube.com/watch?v=FKfMqwSMI4U (I just had to link this :-)
These men do not "respect" the institution of marriage or the religious views on adultery etc.
There are entire forums on the internet devoted to "how to get a girl in a relationship" with "boyfriend destroyer routines" or whatever.
The idea is that an institution employing experts with lots of experience in poaching employees, is going to have an unequal advantage over the employee, and is likely to entice them either through souring their relationship with their current employer (maybe telling an employee about how Apple's workers are treated in China, for example) as well as using psychological tricks to lure them away.
Flirting is one thing. Blatantly propositioning in front of the husband when he's ware of it is something else. Most people draw a line not because they want to flaunt some antitrust law, but because of biological / economic emergent actions.
You can moonlight as an employee, so at the very least you have to agree it's like a swinger/open marriage. I don't know the protocol there, but I'm guessing blatantly propositioning someone in an open marriage falls in to a different category than a closed one. It's much closer to talking to someone who's single.
re: unequal recruiting skill level vs the employee. Are you now taking the position that recruiting is immoral in and of itself?
If the recruiter is instructed not to advertise the company's openings in strip clubs or porn sites, that isn't illegal or immoral. This is how I view instructing the recruiters not to advertise on their competitor's website or target other company's employees. Perhaps they think the cost of bad reputation or reprisals from those companies was too high. It doesn't have to be a "conspiracy". As I posted, an arxiv article shows that cartels are a natural emergent phenomenon of markets.
As far as marriage - there was a time when people worked decades for a company and earned a pension. These days esp in the tech industry those days are long gone. Poaching is an additional cost of hiring employees. You want to increase this cost - fine, and it will be passed on to the employees and depress their salaries. Your argument that the correlation is the other way is sofar without basis. I am not arguing that it is not illegal - the courts should decide that. I am saying this enforcement goes contrary to the purpse of the law and no one wins.
There are certain costs associated with hiring someone. Such as:
1) Recruiting 2) Interviewing 3) Onboarding and introducing to team 4) Provisioning equipment, office, etc. 5) Ramping up and getting integrated
Now, if these costs are paid per employee, then the longer this employee works with us, the more valuable they become and the more money they can make.
BUT
Those employees that get poached, or "fail upwards" into other companies, or whatever, actually make that position cost more. Way more. And I am not just talking about the fact that they might leave mid-project or have a moral hazard of screwing up a project knowing they'll have their next job to fail upwards into. But something even more basic.
For example if I have to pay the cost of 1-5 once every 3 years, that's 3 times less than if I have to pay it every year. So will I bear the full cost of 1-5 every time or pass it on to the employees I hire into that position? Of course I would pass it on, and moreover I can justify it by saying that they don't have "seniority within the organization" or that we are a meritocracy.
So you are completely neglecting this side of the phenomena, and blindly claiming that salaries will go up because poaching increases. It's not at all obvious that they would!
However, I am not the private property of my employer, so unlike this store analogy you need nobody's consent to advertise your job to me. You just call me. This isn't Saudi Arabia where you have to consult my mahram before you offer me a job.
Now under the legal theory we have discussed so far, you may imagine that two companies could voluntarily draw up a contract not to hire me just cause that's what they want to do. However, in the United States we don't allow certain types of contracts, even if all the parties to the contract consent. For example we don't allow murder-for-hire contracts, even though both parties have consented to the contract.
Similarly, this type of contract is one that is prohibited by law even though both of the parties may agree to it. Specifically the Sherman Antitrust Act prohibits "any contract... in restraint of trade or commerce among the several States". That language is kind of vague but the case law for the last 120 years is clear that this sort of contract is the kind that is prohibited by the act.
Steve Jobs knew it was illegal and wrong.
Not sure why that would be illegal.
Second, many people who do objectively illegal things (a) are subtle enough about it to leave doubt and (b) rarely will be caught on the totality of evidence that would convict them. If they leave enough of a trail to prove them guilty on the small things they don't care much about, what are they up to that's hidden from view?
Let's take extortion. Real-world extortionists don't say, "give me money or I'll shoot up your storefront." Making it that obvious will put them in jail. Accidents and annoyances occur, with escalation over time. Rumors are spread, often by the extortionist, that the extortionist is taking interest in the business and will demand payment. Someone goes in, hits his head on the side of the door and demands recompense. Or the extorted party is asked to purchase "protection" services. White-collar extortion tends to focus on reputation rather than physical violence, and the services are dressed as some kind of consulting, but it's a similar game. It's hard to convict because most criminals can stay just on the right side of the line, at least in terms of where they leave a record.
Is this a price-fixing cartel? No, not quite (at least, not from what we know). However, if people are being instructed to follow no-poach agreements and terminated when they break them, it's quite likely that these networks of collusion are being used for worse things, like blacklisting. A no-poach agreement denies career opportunities to people who would otherwise have them. without their knowing why the opportunities are not there or even that it is occurring. That's a big deal. It makes it not unlikely that these companies are also blacklisting, say, people who might support collective bargaining for engineers or who otherwise fight for themselves. Shit, I might be on a PITA list somewhere.
Those sorts of probably illegal collusive arrangements exist all over the Valley, especially among venture capitalists who compare notes on prospects instead of competing on a fair market. Indeed, most of what VCs do would be highly illegal (insider trading, market manipulation, pump-and-dump, use of negative rumor to punish and intimidate) if it pertained to publicly traded stock rather than private equity.
This is a major issue. Even if not illegal, it's still sleazy and shameful.