159 employees leave WordPress founder’s company after extortion lawsuit

The feud between WP Engine and Matt Mullenweg, WordPress co-founder and Automattic CEO, recently came to a head when the web hosting service sued the latter, accusing him of “abuse of power, extortion and greed.” In a new blog post, Mullenweg said his opponent’s attacks on him and his company have been effective enough so that “a good chunk of [his] Automattic colleagues disagreed with [him and his] actions.” As a response, he created a “buy-out package” that offered employees $30,000 or six months of salary, whichever is higher, if they resign. A total of 159 people, or 8.4 percent of the company, took the offer.

Most of the employees who left came from the company’s Ecosystem / WordPress business, while the rest came from the division working on apps like Tumblr and Cloudup. As TechCrunch notes, Mullenweg gave the event a positive spin and exclaimed that “the other 91.6 percent gave up $126 million of potential severance to stay!”

Mullenweg called WP Engine a “cancer to WordPress” and accused the company of violating WordPress’ trademarks. He said they offered WP Engine the option to “pay a direct licensing fee, or make in-kind contributions to the open source project,” but the company refused. WP Engine argued that its use of the WordPress trademark was legal. In response, the WordPress Foundation changed its trademark policy page to say that the “WP” abbreviation is indeed not covered by the WordPress trademark, but to please not use it “in a way that confuses people.” It named WP Engine outright and even said that the company has “never once even donated to the WordPress Foundation, despite making billions of revenue on top of WordPress.” The WordPress co-founder also banned WP Engine from accessing some of WordPress’ plug-ins and themes, which broke a lot of the websites it’s hosting.

WP Engine accused Mullenweg of demanding eight percent of the company’s monthly revenue as royalty and of libel, slander, as well as of violations of the Computer Fraud and Abuse Act and IRS fraud. In a statement, Mullenweg said he stayed up all night reading the complaint and found the whole thing “meritless.” He added that he’s looking “forward to the federal court’s consideration of [the] lawsuit.”