Feds May Be Investigating Apple's Request For Palm To Stop Hiring Apple Employees

Tricia Duryee
Thursday, August 20, 2009; 2:59 PM

Apple's Steve Job was obviously perturbed by the fact that Palm (NSDQ: PALM) hired Jon Rubinstein (pictured) to head-up the company's turnaround. So much so, in fact, that Jobs told Palm's CEO Ed Colligan: "We must do whatever we can to stop this," according to information obtained by Bloomberg.

The back-and-forth dispute between the two CEOs open up a rare window into how competitive the wireless industry can be-and frankly, just how close it was to being squelched. As a result, the U.S. Justice Department may now possibly be investigating hiring practices among technology companies, according to Bloomberg's sources. Palm and Apple (NSDQ: AAPL) declined to comment on the communications.

The exchange reportedly took place back in August 2007. Previously, Rubinstein was head of Apple?s iPod unit before he left Apple in 2006. Palm hired him as executive chairman in 2007 and he replaced Colligan as CEO this year. Bloomberg said it did not know the exact details of what Jobs proposed to Colligan, but Cooligan had this to say in return: "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." Jobs made other veiled threats, as well, by pointing out that Apple has patents and more money than Palm if the companies ended up in a legal fight.

Clearly, there is some overlap between the two tech companies. In the communications between the two, Colligan claimed Apple had hired at least 2 percent of Palm?s workforce as the company developed the iPhone. While the iPhone came out in 2007, Palm released its new webOS on the Palm Pre only this year. Both devices have similarities, like touchscreens and the ability to use gestures. While Apple at one point threatened to defend its device's touch capabilities, it has yet to sue Palm or any other company. The two have fought recently over the ability of the Palm Pre to sync with iTunes directly. Just a few weeks after launch, Apple released a new version of iTunes, which conveniently disabled that feature.

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