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News site Tech Crunch cited anonymous former Google employees in reporting that the two companies had an unwritten deal in place which prevented the two Silicon Valley firms from recruiting away or 'poaching' current employees from either company.
With Google chief executive Eric Schmidt's departure from Apple's board of directors due to increased market competition between the two companies, the deal is now believed to be off.
The report comes after the FTC opened an investigation into Schmidt's role on the Apple board and whether the companies were operating too closely together with their business practices.
The report could signal yet another legal headache for Apple over its business practices. In 2008 settlements were reached in the last of a series of cases against former Apple execs over stock option backdating.
Last month, when chief executive Steve Jobs returned from a six month leave of absence the US Securities and Exchange Commission opened an inquiry as to whether the company failed to disclose the seriousness of Jobs' health condition.