Automattic CEO Matt Mullenweg has rescinded an 8% licensing deal offered to WP Engine in September, suggesting that escalating tensions between the two companies could lead to a corporate acquisition by Automattic.
In an interview with The Repository, Mullenweg said Automattic now wanted more than 8% of WP Engine’s annual revenue, or an equivalent of resources invested into the WordPress project—or a combination of both—in exchange for the use of its “WordPress” and “WooCommerce” trademarks.
“That deal’s not on the table anymore. We’re seeking more, not 8%,” Mullenweg said. “I don’t want to speculate on what the deal might be… In July it was less than 8%, it was smaller. In September it was 8%. The deal they have to do next could be taking over the company, they have no leverage.”
Mullenweg’s latest comments come as Automattic and WP Engine remain locked in a tense stand-off more than a week after he called the rival hosting company a “cancer to WordPress,” accusing it of profiting off the WordPress project and violating trademarks.
While WP Engine has remained tight-lipped over the past week, Mullenweg has ramped up his public criticism of WP Engine through social media, interviews, and livestreams, following years of private negotiations that he says failed to reach an agreement.
“I didn’t wake up one day and suddenly decide to do this,” he said. “I was taken advantage of for so many years. The only way to deal with a bully is to fight,” he said.
“[WP Engine is] a half-a-billion dollar company. [WP Engine’s main investor] Silver Lake has disrupted the ecosystem. I’m fighting for my life’s work.”
Mullenweg said his public attacks would continue, adding “I have a lot to work with.”
“Silver Lake used to hold this asset (WP Engine) on their books for $2 billion… They stand to lose billions [in the event of a corporate takeover].”
Mullenweg’s comments come after he posted in Making WordPress Slack on Saturday about potentially bringing ACF Pro, the premium version of WP Engine’s Advanced Custom Fields (ACF) plugin, into WordPress core.
How the conflict started
Mullenweg blew up WordCamp US 2024 when he called out WP Engine’s apparent minimal contributions to WordPress and Five for the Future in his keynote address on September 20.
According to Five for the Future, WP Engine currently sponsors 11 contributors for a total of 40 hours per week across five teams. By contrast, Automattic, sponsors 116 contributors for a total of 3,948 hours per week across 22 teams. Both companies, as Mullenweg highlighted in WordCamp US & Ecosystem Thinking ahead of his keynote, are roughly the same size with revenue in the ballpark of half a billion.
During his keynote, he also took aim at WP Engine’s main investor, Silver Lake, and specifically its Managing Director, Lee Wittlinger. He acused the private equity firm of maximizing profits over fostering open source values since investing in WP Engine in 2018.
Mullenweg urged the WordPress community to “vote with your wallet,” urging folks to support companies that invest back into WordPress rather than those that prioritize extracting value from the ecosystem without giving back.
In a follow up post on WordPress.org, WP Engine is not WordPress, Mullenweg doubled down on his talk, describing Silver Lake as “hollowing out” the open source WordPress project.
He highlighted WP Engine’s long-time practice of turning off revisions to support his claims, describing the company as “strip-mining the WordPress ecosystem, giving our users a crappier experience so they can make more money.”
“What WP Engine gives you is not WordPress, it’s something that they’ve chopped up, hacked, butchered to look like WordPress, but actually they’re giving you a cheap knock-off and charging you more for it,” Mullenweg wrote.
“This is one of the many reasons they are a cancer to WordPress, and it’s important to remember that unchecked, cancer will spread. WP Engine is setting a poor standard that others may look at and think is ok to replicate. We must set a higher standard to ensure WordPress is here for the next 100 years.”
WP Engine fires back
WP Engine quickly hit back, their legal counsel sending Automattic a cease and desist letter on September 23. In the letter, WP Engine claims that in the days leading up to Mullenweg’s keynote address, Automattic suddenly began demanding large sums of money—”a significant percentage of its gross revenues – tens of millions of dollars in fact – on an ongoing basis,” according to the letter — and if it didn’t, “Automattic would wage a war against WP Engine.”
“This demand was accompanied by allegations about WP Engine’s business that were not only baseless but also bore no rational relation to the payment demand,” the letter claims.
The letter also contains several examples of threatening text messages that WP Engine says demonstrate how Mullenweg attempted to pressure the company into giving into Automattic’s financial demands.
WP Engine also defends its contributions to WordPress, highlighting the “tens of millions of dollars” it gives back through events, sponsorships, and the development of educational resources, including WordCamps, its DE{CODE} conference, as well as maintaining popular projects including ACF, WPGraphQL, and faust.js.
Automattic reveals trademark disputes
The same day, September 23, Automattic’s legal counsel issued its own cease and desist letter, revealing a critical piece of the puzzle missing from Mullenweg’s WCUS keynote: Automattic’s claims that WP Engine is violating the “WordPress” and “WooCommerce” trademarks.
In the letter, Automattic claims WP Engine has developed a business generating annual revenue of over $400 million, which has been “based entirely on extensive and unauthorized uses of the trademarks.”
The letter states that Automattic remains exclusive commercial rights to the trademarks from the WordPress Foundation, and WP Engine needs a license to use them.
As well as ceasing all unauthorized uses of the trademarks, Automattic demands compensation for its lost licensing revenue, suggesting an 8% royalty on WP Engine’s $400 million in annual revenue, or $32 million.
Mullenweg has since clarified that the 8% deal offered was for a percentage of WP Engine’s annual revenue, an equivalent in contributions to the WordPress project, or a combination of both.
In a post accompanying the cease and desist letter, Automattic claims it tried “for years” to get WP Engine to obtain a commercial license for trademark use and contribute to the WordPress project, but the hosting company had repeatedly declined to partner or give back.
Shortly after the letter was published, the WordPress Foundation—of which Mullenweg is one of three board members—changed its Trademark Policy page, calling out WP Engine for allegedly confusing users:
Previously, the text stated:
The abbreviation “WP” is not covered by the WordPress trademarks and you are free to use it in any way you see fit.
The updated text states:
The abbreviation “WP” is not covered by the WordPress trademarks, but please don’t use it in a way that confuses people. For example, many people think WP Engine is “WordPress Engine” and officially associated with WordPress, which it’s not. They have never once even donated to the WordPress Foundation, despite making billions of revenue on top of WordPress.
It was also revealed last week that the foundation filed trademark applications for “managed WordPress” and “hosted WordPress” in July. The revelation has sparked fears among developers and business owners that if these trademarks are granted, they could be used against them.
— Mark Blair (@mblair) September 26, 2024This still leaves a lot of fog.
For example, can someone say they offer "Managed WordPress Hosting" without licensing the WordPress trademark?
Mullenweg escalates attacks
In an apparent attempt at hiding Mullenweg’s recent posts on WordPress.org, WP Engine removed the news widget from its users’ dashboards on September 24, reportedly breaking thousands of sites in the process.
The following day, Mullenweg further escalated things when he banned WP Engine from accessing WordPress.org and its resources. The move blocked WP Engine-powered sites from plugin and theme updates, also breaking sites.
In Post Status Slack, developer Brian Coords accused Matt Mullenweg of “weaponizing” developers:
In response to the ban, WP Engine accused Mullenweg of misusing his control of WordPress to interfere with WP Engine customers’ access to WordPress.org.
“Matt Mullenweg’s unprecedented and unwarranted action interferes with the normal operation of the entire WordPress ecosystem, impacting not just WP Engine and our customers, but all WordPress plugin developers and open-source users who depend on WP Engine tools like ACF. We are taking immediate steps to remediate the impact of this action. We remain steadfastly committed to supporting WP Engine customers, users, and the entire WordPress community,” WP Engine posted on X.
Mullenweg hit back, accusing WP Engine of failing to resolve “Stripe issues.” He later clarified in an interview with ThePrimeTime that WP Engine had been siphoning “tens of millions” of dollars away from Woo’s revenue share partnership with Stripe into its own coffers. It’s understood WP Engine has been swapping out WooCommerce’s Stripe Connect Account information for its own when a user installs WooCommerce.
We have tried to engage on these issues for months. Silver Lake and WP Engine could fix their trademark and Stripe issues today and be back in good standing. They chose not to.
— Matt Mullenweg (@photomatt) September 26, 2024
On September 27, the WordPress.org ban was temporarily lifted to allow WP Engine to access resources until October 1, giving the company a brief window of time to find a workaround.
In an interview with YouTuber Theo Browne on September 29, Mullenweg said he had disabled the WP Engine developer account on WordPress.org, blocking the company from accessing and deploying code to their plugins, including ACF.
On September 30, WP Engine updated its site footer to clarify its use of the WordPress, WooCommerce and Woo trademarks, and that it’s not directly affiliated with the WordPress Foundation or WooCommerce, Inc.:
WP Engine is a proud member and supporter of the community of WordPress® users. The WordPress® trademark is the intellectual property of the WordPress Foundation, and the Woo® and WooCommerce® trademarks are the intellectual property of WooCommerce, Inc. Uses of the WordPress®, Woo®, and WooCommerce® names in this website are for identification purposes only and do not imply an endorsement by WordPress Foundation or WooCommerce, Inc. WP Engine is not endorsed or owned by, or affiliated with, the WordPress Foundation or WooCommerce, Inc.
The company has also changed its plan names from “Essential WordPress,” “Core WordPress,” and “Enterprise WordPress” to “Essential,” “Core,” and “Enterprise.”
On October 1, WP Engine posted on X that it had deployed a solution allowing its customers to again access plugins and theme updates:
We are pleased to report that our solution has been fully deployed and regular workflow practices have been restored to our customers around the globe. We thank all our customers for their patience and support over the past week. Like so many of you, we love WordPress, and are…
— WP Engine (@wpengine) October 1, 2024
It’s not clear what WP Engine’s solution is—whether they’ve mirrored WordPress.org repositories—and if the solution is temporary or permanent, or how the company plans to prevent future disruptions.
What next?
When asked what his legal counsel has advised regarding his speaking out publicly, Mullenweg told The Repository, “When you’re right, you can talk. When you’re wrong, [the lawyers] tell you to shut up. My lawyers are fine, they’re like, ‘go for it!’”
He said he hadn’t spoken to Wittlinger since his text messages ahead of his WCUS keynote. On Saturday, Mullenweg challenged Wittlinger to debate with him publicly.
As tensions escalate, Mullenweg shows no signs of backing down, leaving open the possibility of a corporate takeover or legal battle to resolve the dispute.