Latest in WordPress war: Automattic says it wanted 8% cut of WP Engine revenue
- Reference: 1727909349
- News link: https://www.theregister.co.uk/2024/10/02/automattic_wp_engine_wordpress_license/
- Source link:
As well as contributing to and steering the direction of the open source web publishing system WordPress – used by millions and millions of websites – Automattic also provides commercial hosting of WordPress-based blogs. WP Engine, meanwhile, also sells WordPress hosting, and the pair have been [1]beefing .
Automattic, annoyed at WP Engine using "WP Engine" as a name to do boffo business, likened WP Engine to cancer, and wanted the biz to pay millions of dollars in trademark usage fees to, in Automattic's mind, support the development of WordPress. WP Engine says it shouldn't have to cough up.
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Now, pulling back the curtain further on that drama, Automattic has made public [3]a term sheet , which appears to date back to February 2023, that it was trying to get WP Engine to sign that would make the latter pay "a royalty fee" to fund work on the open source WordPress software that both organizations rely on.
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The proposed seven-year [6]Trademark License Agreement [PDF] calls for WP Engine to pay eight percent of its gross revenue on a monthly basis to Automattic, or in the form of WordPress software development time contributed by salaried employees, or a combination of the two options.
It also includes a ban on forking software from Automattic, its WooCommerce subsidiary, or its affiliate's software (eg, plugins and extensions) "in a manner that disrupts any partnership between Automattic and its commercial partners."
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As an example, the term sheet specifically forbids "changing attribution codes included in any software by Automattic." [8]Attribution codes are metadata in online transactions that let e-commerce merchants understand the effectiveness of marketing campaigns on product orders. Automattic did not provide any details about whether WP Engine is currently doing this.
WordPress software is subject to the [9]GPL-v2 license . WooCommerce is also " [10]fully open source ."
Both outfits last week issued [11]dueling cease and desist letters , with Automattic [12]accusing [PDF] WP Engine was violating its trademarks, while WP Engine [13]claiming [PDF] Automattic CEO Matthew Mullenweg was demanding payment and making false, disparaging statements that interfered with its business.
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Mullenweg contends that WP Engine, backed by venture capital firm Silver Lake, is profiting from WordPress software without giving back to the project. And based on those claims, Automattic's WordPress.org last week [15]cut off WP Engine's access to its servers, thereby preventing WP Engine customers with WordPress websites from updating their themes and extensions.
On Friday, in the wake of community criticism, Mullenweg – through WordPress.org – announced a three-day reprieve for WP Engine until October 1, 2024, so his rival could stand up its own software update service.
WP Engine did not immediately respond to a request for comment, though the company's [16]status page indicates they've deployed an alternative update server.
What complicates the debate is that Matthew Mullenweg, CEO of Automattic and co-creator of WordPress, is also a director of the non-profit WordPress Foundation, which chiefly oversees the open source project.
Mullenweg also [17]owns WordPress.org personally, which is not the same as the [18]WordPress Foundation . The fact that the term sheet says [19]WordPress.org would direct the work of WP Engine employees if the time-donation payment option were chosen makes it [20]unclear who or what entity would be the actual beneficiary of said work.
And his dual role has led critics to argue that Mullenweg [21]should step down from the foundation due to concerns about conflict of interest. It has also led [22]a petition on the website unprotected.org asking the America's consumer watchdog the FTC to investigate Automattic's business practices.
"It has become common for individuals to establish non-profits to develop open-source software (OSS) using unpaid labor and public contributions," the petition states. "However, they may then leverage their for-profit entity to monopolize and privatize the gains, creating a market imbalance."
The FTC declined to comment.
[23]AI agent promotes itself to sysadmin, trashes boot sequence
[24]Satellite phones are coming, but users not happy to pay much extra for the capability
[25]Microsoft throws in the towel on HoloLens 2
[26]The fix for BGP's weaknesses has big, scary, issues of its own, boffins find
In an email, Bruce Perens, one of the founders of the open source movement who drafted the original Open Source Definition, told The Register , "Let's be clear about WP Engine: It's built on WordPress. There would be no business without WordPress. And it's a large business with big revenue, operated as if it's funded by private equity.
WP Engine ... has to increase returns to the investors. What do they do? Cut any voluntary expense, which includes returning any value to the creators of WordPress
"Private equity always demands big returns, regardless of the harm they do to the business. One of my customers has been completely destroyed by them – they are still operating but on such thin resources that they can't dedicate the time of one engineer to work with me on an open source compliance review, even if I do it for free.
"So, WP Engine is in that situation, and has to increase returns to the investors. What do they do? Cut any voluntary expense, which includes returning any value to the creators of WordPress. I'm told that WordPress asked for eight percent of revenue, which sounds fair to me considering that it's the basis of WP Engine's business.
"But because it's an open source project, WordPress can ask but can't demand that money, so they have to turn to hostile enforcement of their trademark and denying access to their updates."
Perens said the situation exemplifies how open source is broken, with some 60 percent of developers being unfunded.
" [27]As you know , I've been working on the [28]Post-Open project , which would make it possible for the developer to demand revenue not only from companies like WP Engine but from their deep-pocketed users," he said.
"As more problems like the WordPress dispute come up, I think people will understand that being able to demand a fair return on their work is essential to continuing the partnership between developers and users fairly, without this sort of dispute."
The Register asked Automattic to elaborate on its concerns about attribution codes, whether WordPress.org has resumed blocking WP Engine, whether Automattic has made a monetary demand to any other WordPress hosting firm, and whether Mullenweg's dual roles as CEO of Automattic and director of the WordPress Foundation represent a conflict of interest.
We'll update this story if we hear back. ®
Updated to add at 0145 UTC, October 3
On Wednesday, WP Engine filed a [29]federal lawsuit [PDF] against Mullenweg and Automattic.
In a statement to The Register , a WP Engine spokesperson summarized the suit's allegations, thus:
Matt Mullenweg and Automattic’s self-proclaimed scorched earth campaign against WP Engine has harmed not just our company, but the entire WordPress ecosystem. The symbiotic relationship between WordPress, its community and the businesses that invest millions to support WordPress users, and advance the ecosystem, is based on trust in the promises of openness and freedom.
Matt Mullenweg’s conduct over the last ten days has exposed significant conflicts of interests and governance issues that, if left unchecked, threaten to destroy that trust. WP Engine has no choice but to pursue these claims to protect its people, agency partners, customers, and the broader WordPress community.
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[1] https://www.theregister.com/2024/09/24/wp_engine_claims_automattic_ceo/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Zv4W5tJudNbAEDmQc2ygvgAAAAQ&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://automattic.com/2024/10/01/wpe-terms/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zv4W5tJudNbAEDmQc2ygvgAAAAQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zv4W5tJudNbAEDmQc2ygvgAAAAQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://automattic.com/wp-content/uploads/2024/09/term-sheet-wp-engine-inc.-automattic-trademark-license_09.19.2024-1.pdf
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Zv4W5tJudNbAEDmQc2ygvgAAAAQ&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://woocommerce.com/document/order-attribution-tracking/
[9] https://wordpress.org/about/license/
[10] https://woocommerce.com/wordpress-ecommerce/
[11] https://www.theregister.com/2024/09/24/wp_engine_claims_automattic_ceo/
[12] https://automattic.com/2024/wp-engine-cease-and-desist.pdf
[13] https://wpengine.com/wp-content/uploads/2024/09/Cease-and-Desist-Letter-to-Automattic-and-Request-to-Preserve-Documents-Sent.pdf
[14] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Zv4W5tJudNbAEDmQc2ygvgAAAAQ&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[15] https://www.theregister.com/2024/09/26/wordpressorg_denies_service_to_wp/
[16] https://wpenginestatus.com/incidents/641994
[17] https://x.com/grigs/status/1840958978043605361
[18] https://wordpressfoundation.org/
[19] http://wordpress.org/
[20] https://www.pluginvulnerabilities.com/2024/09/30/who-owns-the-wordpress-website-and-wordpress-org/
[21] https://notes.ghed.in/posts/2024/matt-mullenweg-wp-engine-debacle/
[22] https://unprotected.org/
[23] https://www.theregister.com/2024/10/02/ai_agent_trashes_pc/
[24] https://www.theregister.com/2024/10/02/sat_phone_user_pay/
[25] https://www.theregister.com/2024/10/02/microsoft_hololens_2_dead/
[26] https://www.theregister.com/2024/10/02/rpki_immaturity_study/
[27] https://www.theregister.com/2024/04/30/bruce_perens_post_open_license/
[28] https://postopen.org/
[29] https://wpengine.com/wp-content/uploads/2024/10/Complaint-WP-Engine-v-Automattic-et-al-with-Exhibit.pdf
[30] https://whitepapers.theregister.com/
I have a certain amount of sympathy - and I can fully understand and agree with them cutting off access to their servers - but the fact is, they chose a license that allows this, and now they are moaning because someone does so successfully?
If they didn't want this to happen, why choose this license?
Perhaps because many contributors, and third party plugin writers wouldn't have done so if the software was under a different licence? In fact, the very part of the license they are moaning about may be a good reason why WP has grown as it has, in which case, it seems like they want to have their cake and eat it. (or "eat their cake, yet still have a cake left in reserve", as the saying actually means)
I wonder if those servers are being run for and by Automattic, or if they are run for and by the WordPress Foundation. If they are Automattic's then there is no issue with them blocking access, but if those servers are being run for the foundation, even if Automattic donates the hosting, then I see huge red flags with Automattic cutting off access to the customers of their competitors. Because that is what they did, they didn't just cut off WP Engine, they cut off every company that uses WP Engine for hosting even if those companies don't use WP Engine's management services.
Automattic is trying to frame this as some sort of trademark dispute, but we should note that the WordPress foundation owns the rights to the WordPress trademark, not Automattic. The WordPress Foundation has licensed the trademark to Automattic, but the trademark does not extend to the letters "WP". Neither the foundation nor Automattic have exclusive rights to "WP". That is why "WP Engine" or any other business name that contains those letters is not a trademark violation, whether related to WordPress or not.
But 8% of the GROSS TURNOVER? That is more than the net profit of many hosting companies. WP Engine is a hosting company, and they have built their business around hosting open-source applications, particularly WordPress, but Apache and Linux certainly make a bigger contribution to their bottom line in terms of dollars per line of code. Yet while WP Engine makes money from hosting WordPress websites, Automattic somehow feels that they are entitled to all of their profit from all lines of business?
This is nothing more than Automattic trying to weaponize open source to take out a competitor.
Will they try to take 8% of GoDaddy's profit next? Are they going to start demanding a percentage of all sales from WooCommerce sites like the credit card companies do?
And that term sheet -- they want to prevent someone from forking open source software? They want someone to agree to terms and conditions for branding for seven years when they haven't even defined what those future conditions would be? Nobody in their right mind would sign any sort of contract like that, and Automattic knows it. Mullenweg could be a poster child for "negotiating in bad faith".
Yep, it's the ugly side of open source
'They're making more money than us because they're better at business, and it isn't fair!'
Welcome to capitalism. If you make mistakes that cost you money, your customers will not be nice, they will usually take everything they can without killing the goose. Extracting more value than you paid is what business *is*. Your business model is built on other people being able to take as much as they can get? Sounds like you won't be in business long.
Should WP Engine morally pay a reasonable amount to WordPress if they're carrying out most of the development? Absolutely. They don't have to, however, and 8% of gross income is a ridiculously large figure to request, you'd be better forking all the WordPress code, renaming it PressWord, and employing a team of developers. It would be substantially cheaper than 8% of gross income, and carry less business and investor risk.
Bruce Perens has lost the plot and for love of $DEITY, can we please stop calling it "open source"? It is "free software" as in freedom. It has nothing to do directly with the ability to see the source code. Freedom is baked in. That was the *whole* point of the free software movement.
Whatever the truth about the trademark claims (honestly I don't care, it is for them to sort out in the courts), WP Engine are for the most part selling hosting, which is infrastructure. If I buy a hammer and use it to make furniture, I have no legal nor moral obligation to contribute to the development of hammer technology: I am selling my labours and the service that I am providing to my customers.
If my selling of furniture is immensely successful then that's great for me and nothing to do with hammer manufacturers. If the makers of hammers have a problem with that, then they can f*ck off.