iLounge

Former Palm CEO Ed Colligan rejected what he deemed a “likely illegal” proposal from Apple CEO Steve Jobs that the two companies refrain from hiring each other’s employees, according to two-year-old communications between the two executives obtained and reviewed by Bloomberg News. While the report states that the exact details of what Jobs proposed are unknown since the proposal was not included in the documents it received, it did review Colligan’s response, which said, “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.” Colligan reportedly considered offering hiring concessions, before deciding against it.

The proposal appears to have been a direct result of Palm’s hiring of former Apple executive Jon Rubinstein to develop new products; Jobs was concerned that Rubinstein would recruit Apple employees away from the company to join his team at Palm—a rational fear, given that Apple had hired a number of Palm employees in the lead-up to the iPhone. “We must do whatever we can to stop this,” Jobs said. The U.S. Justice Department is investigating possible collusion in hiring practices amongst technology companies, and the Federal Trade Commission is currently looking into whether ties between Google and Apple through shared board members—including Google CEO Eric Schmidt, who recently resigned from Apple’s board—might have led to a similar arrangement, reducing competition between the two companies.