I guess I'm cynical, but I'm not surprised. I wouldn't have expected some specific individuals (I thought more of Eric Schmidt; I always liked him) to be involved but the behavior is not shocking. Yes, it's shitty and illegal. No, it's not at all surprising.
Let's say that you're talking to an investor and you tell him that you're being courted by another VC and that he needs to act fast. What's the first thing he'll do, if he takes you seriously? Pick up the phone and call the guy (they were classmates in business school, and it's "bros before schmos", man.) If there was proper competition, that sort of thing would never happen.
Social class is an ugly reality and people in higher social classes always look out for each other first. The real competition is insiders vs. outsiders. Human societies are naturally conspiratorial. I don't know what the solution to this problem is (other than, individually, to just keep working hard and trying to be awesome enough that the general wankbasketry of humanity doesn't matter) but it's obvious that our current regulatory machinery is too thin.
I don't think it's just the higher classes that look out for each other, you will find inverse snobbery everywhere. It's just more visible in the higher classes because they have disproportional income and influence.
I think most people here would rather hang out with another techie from a rival company than they would with the head of marketing from their own company.