If Google is willing to pay $200k over your current employer for you, your employer is paying you $200k under your market rate.

Let's say your value to most employers is $100k---this is the amount of money you make for them balanced against the amount you want in order to work for them.

Then the Goog enters the picture and is willing to add another $200k premium to that, in order to prevent you from working for that employer. This isn't sustainable; you're still you and your direct value to Goog is only $100k. The additional amount represents how much damaging a competitor is worth to Goog. As soon as the competitor goes out of business or Goog stops having piles of cash laying around to fight with other companies, that additional value evaporates.

If you decide to leave Goog, you should probably not expect to get $300k or more. In fact you may get less than $100k, if Goog has eliminated the competitors to whom you are valuable.

"Market rate" is extremely unstable.

Of course it's probably also possible for it to be that you're uniquely valuable to Google in the context of their other people, infrastructure, and strategy. Especially as people acquire specialized skills and experience, they can be worth a lot more to some companies than others.

This is true of everyone of course. Even a more or less commodity junior Javascript developer isn't worth much more than their generalized ability to do random tasks to a company that doesn't do any software development.

But some people have a skillset and track record that is very valuable to some companies but that would make it hard to be hired at most.

This economic theory depends on the idea that Google is the only well-capitalized software company... In reality there are several.

Market rates being unstable don't make them stop being market rates.

This. You can't define a market rate as being lower then a bunch of other employers are willing to pay. Your market rate is what people will pay you. I see this all the time with saying FANG pays above market rate. Now if we're saying "average" market rate, sure there is an average market rate for a larger group of developers that they pay above, but then you need to do a good job of talking about what other companies are paying relative to average or median, not just say one is above market rate because it is above what many smaller companies will pay

You can view this issue from another standpoint.

Imagine some market where 10 companies sell bread and it costs $5. And lets assume that the costs are $4 and $1 is profit.

Then comes a company that makes its money on selling water and it is doing very well. It comes to a bread market and starts selling bread for $3.

The competition is quickly destroyed and the bread prices rise.

Edit: as a sibling comment mentioned: https://en.wikipedia.org/wiki/Predatory_pricing

Sorry, but that's not what's being described here. If you want it to be about your bread market, then the water guy is hiring your best baker because bread is worth $10 when combined with water, but only if it's particularly good bread.

Maybe 50 of the other 99 bakers at the 10 bread-selling companies are also capable of making good bread and will feel bad, maybe the company that lost the baker will feel bad, maybe that company will even fail because it turns out that really was their best baker... but in that case, it just proves that the water company was paying the market price for that baker. Which they were.

Spending more on talent is not predatory pricing.

Google buys labor using the proceeds from the stuff they assign the labor to do. Their money does not come from a second market unrelated to programmers. Even if you flipped buyers and sellers your analogy would be inapplicable.

> Their money does not come from a second market unrelated to [those] programmers.

Yes it does: Google makes money from advertising, not from self-driving cars.

I believe a better analogy would be that the 11th company comes and is willing to pay higher costs while still selling at the same price. That company gets the best ingredients at that cost, the suppliers prefer to sell to that company, and denies it to the first 10 companies. The 11th company might even raise prices since their product is better. I don't think predatory pricing would apply in this situation.

Are you sure that there's the direct analogy between pricing and salary models like that?

> If Google is willing to pay 200k above market rate

This is not possible according to the usual definition of "market rate".

If Google is willing to pay X, that is the market rate.

I disagree with your definition of "market rate", but let's suppose you're right: Do you not see it as a problem that Google alone decides the cost of entry to an entire market?

Google isn't the only well-paying software company. If they were, they wouldn't throw money away by paying so much in the absence of competition. Furthermore, there's nothing stopping you from paying $100,000/hour and beating Google if you wanted to. If your business can't make good enough use of programmers to justify paying more than Google, then maybe their talents would be best allocated where they would be most valuable.

Why do you think that Google alone can afford to hire software engineers?

edit - I see how my post was misleading. I should have said X is a "lower bound" for the market rate.

Do you mean upper bound?

> Do you not see it as a problem that Google alone decides the cost of entry to an entire market?

This puts Google in the position of being a monopsony for the labor of programmers; that is, they're the only or primary buyer of that commodity. Part of antitrust laws is preventing that, so, yes, there is a problem if a monopsony arises, but Google isn't in that position anyway because jobs aren't completely interchangeable the same way programmers aren't completely interchangeable. For example, companies can compete on the basis of not being Google, which attracts some people. Companies can compete on the basis of being based in some other geographic location, or having other things to work on, or having a different mix of salary and benefits.

Google offering the highest salary doesn't mean they automatically get everyone. It means they get people who want the highest salary to do what Google's interested in as opposed to wanting to work on some kinds of technology Google isn't pursuing.

The law defines practices that, while they happen in a marketplace, are anti-competitive and thus problematic. It is not anti-competitive to own the gas station next to the airport and charge a premium for gas. It is anti-competitive to buy out surrounding gas stations and close them to extract higher prices, or to conspire with competing stations to coordinate pricing.

Single-firm anticompetitive behavior, as defined by FTC: (https://www.ftc.gov/enforcement/anticompetitive-practices)

Single Firm Conduct:

"It is unlawful for a company to monopolize or attempt to monopolize trade, meaning a firm with market power cannot act to maintain or acquire a dominant position by excluding competitors or preventing new entry. It is important to note that it is not illegal for a company to have a monopoly, to charge “high prices,” or to try to achieve a monopoly position by aggressive methods. A company violates the law only if it tries to maintain or acquire a monopoly through unreasonable methods."

Horizontal Conduct:

"It is illegal for businesses to act together in ways that can limit competition, lead to higher prices, or hinder other businesses from entering the market. The FTC challenges unreasonable horizontal restraints of trade. Such agreements may be considered unreasonable when competitors interact to such a degree that they are no longer acting independently, or when collaborating gives competitors the ability to wield market power together. Certain acts are considered so harmful to competition that they are almost always illegal. These include arrangements to fix prices, divide markets, or rig bids."

That's in relation to creating artificial scarcity of a product or controlling supply.

Staff aren't a product or commodity.

Labor certainly is a commodity.

I have a relative who bought a very nice beach house from his legal fees suing a hospital network for doing something similar.

That's assuming that the thing Google is buying is a commodity, and its value is the same to all parties.

If I hire Brad Pitt to be in my (post-pandemic) summer blockbuster film, part of the value he adds is that he is not simultaneously in your summer blockbuster film, and so people who really want to watch Brad Pitt will choose my film over yours.

I don't think what you're describing is anti-competitive behavior, rather it's omni-competitive. Pretty much all the money Google throws at anything is "advertising money" but if they are really trying to make self-driving cars, what's wrong with that?

Should my Brad Pitt Summer Blockbuster profits not be able to bankroll my Teletubbies Christmas Special?

If Google is stopping forward progress to entrench their moat, they need to be broken up by the DOJ.

There's plenty of antitrust fodder already with their stranglehold over the web and the behavior they've taken to protect their search/ad business. But if they're hiring people away in cutting edge areas of research simply to destroy startups, that's abhorrent. That means they're pouring their obscene wealth from advertising into unrelated fields in order to dominate them.

Monopoly.

This is true but long term Google can not sustain that. MS did the same in the 90s. Google is failing to execute on many 'big ideas'. Not because of a shortage of talent. But because of a shortage of follow through and nothing moves the needle anymore. That means any new product that has a shot of being interesting (say 1%) has to produce 1.6 billion pretty quickly. There are very few new businesses that start at that position. MS should have owned the cell market. Not for a lack of trying or talent. But they kept changing positions and tech stacks every few months. They lacked the will to do it. Google is in a similar position now with most of its projects outside of its 'core' ideas. What happens, fairly quickly, is the talent figures out that the company does not really value their ideas. They move out of the company and do something else.