Apple, Palm No-Poaching Pact: What Happens Now?


It's been two years since Apple CEO Steve Jobs stumped for a gentleman's agreement with Palm CEO Ed Colligan through which neither company would hire employees away from the other.

And it's been two years since Colligan politely declined Jobs' offer, saying the idea of such a pact was both wrong and possibly illegal.

In the wake of the August 2007 communications between Jobs and Colligan, which were chronicled this week in a Bloomberg report, Palm continued to pluck employees from the Apple tree. While current Palm CEO Jon Rubinstein left Apple for Palm just months before Jobs reached out to Colligan, Rubinstein has since wooed away a handful of Apple employees. Now, three former Apple executives, including Rubinstein, sit on Palm's 10-person team of key executives.

With the communications between Apple's Jobs and Palm's Colligan coming to light, what happens now? Does Palm stop poaching from Apple because of public scrutiny? Does Apple step up its game and fight Palm over not only employees but intellectual property? And does the government need to get involved and probe Jobs' proposed no-poaching agreement?

Likely, none of those things will happen.

First, Palm wants to beat Cupertino, Calif.-based Apple. Palm was a smartphone and mobile device pioneer. In their eyes, Apple is a Johnny-come-lately that developed a stellar product in the Apple iPhone, and Palm wants to do everything in its power to rival the fruits of Apple's labor. That's why Palm picked up Rubinstein in the first place. Palm was in the early development of what are now the Palm Pre and Palm's webOS, Palm's answer to the iPhone. The Pre probably wouldn't be if it hadn't been for a few Apple additions to Palm's roster, whether on the executive or engineering side. As long as Palm's Apple picking continues to produce, nothing will stop it.

So how will Apple respond now that the Jobs and Colligan communiques are somewhat public? It's probably best for Apple to leave Palm alone for the time being. The Bloomberg report highlighted Steve Jobs' childishness, noting that when Colligan declined Jobs' no poaching offer, Jobs reminded Colligan of Apple's arsenal of patents and its fat stacks of cash, big assets if the two were ever to be embroiled in a court battle.

Since the exchanges between Colligan and Jobs, Apple has made similar veiled threats against Palm, with Apple acting CEO Tim Cook responding to a question about the Palm Pre in a January earnings call saying "we're going to go after anybody" that rips off Apple's intellectual property and will "use whatever weapons we have at our disposal." But unless Sunnyvale, Calif.-based Palm is blatantly stepping on Apple's toes, it's more beneficial for Apple to sit back and do nothing, or risk another public black eye.

And then there's the question of government involvement. That's more complex. The U.S. Department of Justice is already investigating collusion in the high-tech industry, and a case like this could be taken into consideration. Would it be grounds for its own investigation? Probably not, considering it was two years ago and nothing really came of the discussions anyway.

So, in the end, as the dust settles around the Apple and Palm no-poaching pact that never was, it looks like things are going to stay the same for the foreseeable future. That is until one of the companies slips up again.