Automattic Royalty Fees Strategy Alleged in Unsealed Court Documents
Newly unsealed legal filings have intensified the high-stakes dispute between WordPress hosting leader WP Engine and Automattic, the company founded by WordPress co-creator Matt Mullenweg. According to WP Engine’s third amended complaint, internal communications suggest Automattic devised a coordinated plan to demand royalty payments from at least ten competing WordPress hosting providers. The documents further allege Mullenweg personally contacted a major payment processor seeking termination of WP Engine’s services after litigation began. These claims strike at the heart of a volatile debate: How should commercial entities fairly support the open-source WordPress project they rely on? For the millions of businesses and creators using WordPress—the engine behind over 43% of global websites—these developments signal potential shifts in ecosystem dynamics, costs, and ethical expectations.
Credit: Google
From Bilateral Dispute to Industry-Wide Concern
What began as a targeted conflict in late 2024 has rapidly expanded in scope. WP Engine initially sued Automattic and Mullenweg for defamation and alleged abuse of influence after public demands for an 8% royalty on gross revenue. Automattic countered, asserting WP Engine improperly leveraged the WordPress trademark while contributing minimally to core project development. During sealed discovery phases, WP Engine gained access to internal correspondence now central to its updated filing. Legal observers note the significance of these documents moving from confidential to public record—a procedural shift that transforms the case from a private grievance into a matter of industry-wide transparency. The timing underscores growing anxiety among hosting providers about precedent-setting enforcement tactics.
Pattern of Pressure: Beyond a Single Target
The amended complaint paints a broader strategic picture. Cited emails and memos indicate Automattic identified multiple hosting companies for similar royalty discussions. While specific competitor names remain partially redacted per court order, filings reference one major web services corporation—overseeing several widely recognized hosting brands—as already operating under a royalty agreement with Automattic. Additional correspondence suggests active outreach to other significant market players. WP Engine’s legal team argues this reveals a systematic campaign, not an isolated negotiation. For smaller hosting firms watching closely, the implication is stark: trademark usage could soon carry standardized financial obligations, reshaping operational budgets and competitive positioning across the sector.
The 8% Question: Fair Contribution or Arbitrary Figure?
Central to the conflict remains the contested royalty rate. Publicly, Mullenweg has framed the 8% figure as derived from business analysis—estimating ~$32 million annually while preserving WP Engine’s profitability. He characterized it as a balanced outcome after 18 months of dialogue. Yet WP Engine’s filing challenges this rationale, highlighting alleged internal remarks suggesting the rate was selected because it was what WP Engine “could afford to pay.” This discrepancy fuels deeper philosophical tension. Does trademark-based monetization responsibly fund open-source sustainability? Or does it risk commercializing community-built infrastructure? How courts weigh intent versus impact here could influence contribution models for open-source projects far beyond WordPress.
Alleged Tactics: Language and Leverage Under Scrutiny
The complaint details communications WP Engine characterizes as escalatory. Phrases like “if they don’t take the carrot, we’ll give them the stick” and references to preparing for “nuclear war” appear in cited internal messages. Separately, documents describe an email from Mullenweg to a senior executive at a leading payment processing firm, urging review of WP Engine’s account shortly after the lawsuit commenced. WP Engine contends this constituted retaliatory pressure aimed at disrupting operations. While Automattic has not addressed these specific excerpts publicly, the allegations spotlight critical questions about ethical boundaries: When does competitive advocacy cross into undue influence? How should third-party relationships be navigated during litigation? These nuances matter deeply to businesses reliant on stable payment and hosting ecosystems.
Automattic’s Stance: Dismissal and Principle
In response to the amended filing, Automattic issued a firm statement: “There is nothing new here. This is the same narrative WP Engine has advanced for over a year, and the Court has already dismissed many of its central claims. The lawsuit is going nowhere.” The company reaffirms its position that hosting entities profiting significantly from WordPress bear responsibility to reinvest in its future. Automattic emphasizes its decade-long stewardship of WordPress.org development, security, and community initiatives—funded largely through WordPress.com and related ventures. This framing positions royalty discussions not as revenue grabs, but as structured pathways to ensure long-term project health amid growing commercial dependence.
Why Every WordPress User Should Pay Attention
This isn’t just a corporate legal battle. Over 80 million websites run on self-hosted WordPress (WordPress.org), many managed through third-party hosts. If royalty frameworks expand, operational costs could ripple outward—potentially affecting pricing, service tiers, or support resources for end users. Conversely, clearer contribution standards might strengthen core software security, updates, and innovation. Developers, agencies, and small business owners increasingly voice concerns in community channels: Will my host pass costs to me? Could trademark policies limit my flexibility? These anxieties reflect a deeper need for transparent, collaboratively shaped norms that honor WordPress’s open-source roots while acknowledging modern commercial realities.
The Road Ahead: Precedent in the Making
Legal experts indicate the court’s next steps will focus on evidence admissibility and merit assessment of remaining claims. Beyond litigation, the case has already ignited proactive dialogue. Open-source foundations, hosting alliances, and developer collectives are revisiting trademark guidelines and contribution frameworks to prevent future friction. For industry stakeholders, this moment calls for nuanced reflection: How do we balance stewardship with accessibility? What does “fair contribution” truly mean in a decentralized ecosystem? Answers won’t emerge overnight—but the conversation is now unavoidable.
Community at the Crossroads
At its core, this dispute echoes WordPress’s founding tension: a global community-powered project thriving within a competitive commercial landscape. Trust, transparency, and shared purpose have long been its bedrock. As legal proceedings continue, the broader ecosystem watches—not with partisan allegiance, but with hope for resolution that strengthens rather than fractures. Whether through updated policies, voluntary contribution models, or clarified expectations, the path forward must prioritize the millions who depend on WordPress to share ideas, build businesses, and connect globally. The outcome will resonate far beyond courtrooms, shaping how open-source innovation sustains itself for generations to come.
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