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Automattic founder, Matt Mullenweg

Source: Automattic

Matt Mullenweg, who turned 40 in January, has now spent more than half his life working on WordPress. He’s never had such an insane two weeks.

WordPress, best known as a leading content management system, has hundreds of millions of sites currently using its templates, tools and plugins. But the WordPress universe is a complicated mishmash of open-source products, nonprofits, for-profit companies, trademarks and licenses.

The typically quiet but extremely important part of the internet — WordPress powers roughly 40% of all websites — has suddenly emerged as a major source of tech industry drama, threatening to upend an ecosystem that’s long been viewed, from the outside at least, as collegial, thanks to its longevity and the various fun-loving camps and learning sessions it hosts every year.

While WordPress’ technology is open source, meaning anyone can install it and use it for free, Mullenweg is also founder and CEO of Automattic, a venture-backed startup valued at $7.5 billion, as of 2021. WordPress.com is Automattic’s central businesses, and individuals and companies pay anywhere from $4 a month to over $25,000 a year for services like ad products, security, customer support and inventory management.

The saga that burst into public view in September featured the normally mild-mannered Mullenweg as its central character in a battle with WP Engine, one of the leading providers of WordPress hosting. Silicon Valley private equity firm Silver Lake bought a majority stake in WP Engine in 2018, investing $250 million and obtaining three board seats.

“I’ve been doing WordPress for 21 years, I have good relationships with every other company in the world,” Mullenweg said in an interview this week with CNBC.

WP Engine’s offense, according to Mullenweg and a cease-and-desist letter his attorneys sent to the company on Sept. 23, revolves around years of trademark violations and WP Engine’s claim that it’s bringing “WordPress to the masses.”

“We at Automattic have been attempting to make a licensing deal with them for a very long time, and all they have done is string us along,” Mullenweg wrote in a Sept. 26 post on his personal website, ma.tt. “Finally, I drew a line in the sand, which they have now leapt over.”

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Since then, the matter has escalated on an almost daily basis. WordPress took the drastic step of banning WP Engine from using the WordPress resources necessary to serve its customers, which preceded a lawsuit filed on Wednesday by WP Engine against Mullenweg and Automattic. Mullenweg then put out another post, calling WP Engine’s suit “meritless,” and announcing that he’d hired Neal Katyal, former U.S. acting solicitor general, for legal defense.

Tomasz Tunguz, a venture capitalist and founder of Theory Ventures, says the conflict speaks to the perpetual challenge of open-source software.

“What are the legitimate ways of monetizing open source and does the commercial entity created by the authors — how much control should they have with the commercialization efforts?” Tunguz said. In this case, “hundreds of millions in revenue is at stake between the two,” he added.

‘Silver Lake doesn’t give a dang’

In Mullenweg’s telling of the brouhaha, the battle has been years in the making. He’s been actively trying to strike a deal since January and finally got fed up, he said.

But to the outside world, it all felt very sudden. Mullenweg first referenced the matter in public on Sept. 17, in a blog post ahead of WordCamp, the largest annual gathering in the U.S. of WordPress users. The four-day event took place in Portland, Oregon, beginning on Sept. 17.

In the post, Mullenweg criticized WP Engine for not contributing enough back to the WordPress ecosystem. He said that Automattic contributed 3,786 hours per week to WordPress.org, (“not even counting me!”) compared to 47 hours for WP Engine.

For businesses and developers considering who they want to support, Mullenweg had this message: “Silver Lake doesn’t give a dang about your Open Source ideals. It just wants a return on capital.”

A Silver Lake spokesperson said WP Engine was handling all inquiries. A WP Engine representative referred to the company’s complaint against Automattic and Mullenweg, filed on Oct. 2. The spokesperson highlighted the introduction of the complaint.

“This is a case about abuse of power, extortion, and greed,” the filing begins. “The misconduct at issue here is all the more shocking because it occurred in an unexpected place — the WordPress open source software community built on promises of the freedom to build, run, change, and redistribute without barriers or constraints, for all. Those promises were not kept, and that community was betrayed, by the wrongful acts of a few—[Matt Mullenweg and Automattic]—to the detriment of the many, including WPE.”

On Sept. 20, three days after Mullenweg’s initial post, the WordPress founder showed he wouldn’t be backing down.

In his keynote, at an event that attracted an estimated 1,500 WordPress fanatics, Mullenweg warned the audience upfront that it “might be one of my spiciest WordCamp presentations ever.” After reading out his prior blog post, Mullenweg took swipes at Silver Lake, even naming a partner at the firm, Lee Wittlinger, as the man behind WP Engine, comparing him to a “schoolyard bully.”

Prior to taking questions, Mullenweg said of WP Engine’s presence at WordCamp, “they’re not going to be at future ones, I don’t think.”

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He wasn’t done.

The next day, in a post titled, “WP Engine is not WordPress,” Mullenweg wrote that even his mother didn’t know the difference, and he said WP Engine is “profiting off of the confusion” and “needs a trademark license to continue their business.”

His mom wasn’t the only one confused.

Bob Perkowitz, president of environmental nonprofit ecoAmerica, told CNBC that he’s known Mullenweg for 16 years and is even an investor in Automattic. For a number of his organizational and personal websites, Perkowitz said he’s long been a WP Engine customer. Tuning in remotely, he heard Mullenweg’s WordCamp presentation.

“I always thought that was part of WordPress,” Perkowitz told CNBC in an interview, referring to WP Engine. “They’re misleading, and they don’t contribute to the community.”

Perkowitz said he’s having his website administrator migrate all of the websites to different hosting companies.

Following Mullenweg’s presentation, WP Engine sent Automattic’s legal chief a cease-and-desist letter on Sept. 23, due to what the company called Mullenweg’s self-described “scorched earth nuclear approach.” The letter said Mullenweg had demanded a payout of a “very large sum of money” before his WordCamp keynote, and WP Engine didn’t pay up.

The letter said Mullenweg’s “false, misleading, and disparaging statements are legally actionable.”

Two days later, Mullenweg wrote on the WordPress.org site that WP Engine had been banned, meaning it “no longer has free access to WordPress.org’s resources.” Mullenweg encouraged WP Engine’s thousands of customers to contact the company “and ask them to fix it.”

WordPress then temporarily unblocked WP Engine and gave it until Oct. 1 to agree to terms of a licensing agreement, which Mullenweg made public. The crux of the deal is that WP Engine would agree to a royalty fee of 8% of monthly revenue to Automattic or commit 8% of revenue “in the form of salaries of WP Engine employees” working on WordPress features for WordPress.org.

No deal was made. The ban went into effect Oct. 1.

To the universe of WP Engine customers, Mullenweg’s actions were harsh and clumsy. Mullenweg says that what his critics don’t understand is how long he’s been trying to come to a deal.

“They’ve been delaying forever,” Mullenweg told CNBC. He decided, “I’m going to finally start talking about the evil stuff you’re doing unless you talk to me,” he said.

Fighting back

Far from negotiating, WP Engine on Wednesday filed its explosive lawsuit against Mullenweg and Automattic.

WP Engine accuses Mullenweg of slander and libel due to his public comments and says the WordPress founder has numerous conflicts of interest in how he runs the community and his company, give the open-source nature of the technology.

“Over the last two weeks, Defendants have been carrying out a scheme to ban WPE from the WordPress community unless it agreed to pay tens of millions of dollars to Automattic for a purported trademark license that WPE does not even need,” the lawsuit says. “Defendants’ plan, which came without warning, gave WPE less than 48 hours to either agree to pay them off or face the consequences of being banned and publicly smeared.”

Following WP Engine’s demands for a jury trial in its 61-page lawsuit, Mullenweg fired back, describing the complaint as “baseless” and “flawed, start to finish.”

On his personal website, Mullenweg acknowledged that the ordeal was causing a big internal clash at his company.

“It became clear a good chunk of my Automattic colleagues disagreed with me and our actions,” Mullenweg wrote.

He says he made the decision to offer buyout packages for anyone who resigned before early afternoon Thursday, offering $30,000 or six months of salary, whichever is higher. Anyone who took the deal wouldn’t be eligible to “boomerang,” a term for getting rehired.

Mullenweg said that 159 people, or 8.4% of the workforce, took the offer while the 91.6% who opted to stay turned down a collective $126 million.

Mullenweg concluded by saying, “now I feel much lighter.”

“I’m grateful and thankful for all the people who took the offer, and even more excited to work with those who turned down $126M to stay,” Mullenweg wrote. “As the kids say, LFG!”

Mullenweg may be openly enthusiastic and grateful for the employees he still has on board, but the WordPress community is a mess. Many WP Engine customers are suffering, and Automattic is gearing up for a legal fight against a private equity firm with over $100 billion in assets.

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Intuit shares drop as quarterly forecast misses estimates due to delayed revenue

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Intuit shares drop as quarterly forecast misses estimates due to delayed revenue

Intuit CEO Sasan Goodarzi speaks at the opening night of the Intuit Dome in Los Angeles on Aug. 15, 2024.

Rodin Eckenroth | Filmmagic | Getty Images

Intuit shares fell 6% in extended trading Thursday after the finance software maker issued a revenue forecast for the current quarter that trailed analysts’ estimates due to some sales being delayed.

Here’s how the company performed in comparison with LSEG consensus:

  • Earnings per share: $2.50 adjusted vs. $2.35 expected
  • Revenue: $3.28 billion vs. $3.14 billion

Revenue increased 10% year over year in the quarter, which ended Oct. 31, according to a statement. Net income fell to $197 million, or 70 cents per share, from $241 million, or 85 cents per share, a year ago.

While results for the fiscal first quarter topped estimates, second-quarter guidance was light. Intuit said it anticipates a single-digit decline in revenue from the consumer segment because of promotional changes for the TurboTax desktop software in retail environments. While that will affect revenue timing, it won’t have any impact on the full 2025 fiscal year.

Intuit called for second-quarter earnings of $2.55 to $2.61 per share, with $3.81 billion to $3.85 billion in revenue. The consensus from LSEG was $3.20 per share and $3.87 billion in revenue.

For the full year, Intuit expects $19.16 to $19.36 in adjusted earnings per share on $18.16 billion to $18.35 billion in revenue. That implies revenue growth of between 12% and 13%. Analysts polled by LSEG were looking for $19.33 in adjusted earnings per share and $18.26 billion in revenue.

Revenue from Intuit’s global business solutions group came in at $2.5 billion in the first quarter. The figure was up 9% and in line with estimates, according to StreetAccount. Formerly known as the small business and self-employed segment, the group includes Mailchimp, QuickBooks, small business financing and merchant payment processing.

“We are seeing good progress serving mid-market customers in MailChimp, but are seeing higher churn from smaller customers,” Sandeep Aujla, Intuit’s finance chief, said on a conference call with analysts. “We are addressing this by making product enhancements and driving feature discoverability and adoption to improve first-time use and customer retention.”

Better outcomes are a few quarters away, Aujla said.

CreditKarma revenue came in at $524 million, above StreetAccount’s $430 million consensus.

At Thursday’s close, Intuit shares were up about 9% so far in 2024, while the S&P 500 has gained almost 25% in the same period.

On Tuesday Intuit shares slipped 5% after The Washington Post said President-elect Donald Trump’s proposed “Department of Government Efficiency” had discussed developing a mobile app for federal income tax filing. But a mobile app for submitting returns from Intuit is “already available to all Americans,” CEO Sasan Goodarzi told CNBC’s Jon Fortt.

Goodarzi said on CNBC that he’s personally communicating with leaders of the incoming presidential administration.

On the earnings call, Goodarzi sounded optimistic about the economy.

“Our belief, which is not baked into our guidance, is that we will see an improved environment as we look ahead in 2025, particularly just with some of the things that I mentioned earlier around just interest rates, jobs, the regulatory environment,” he said. “These things have a real burden on businesses. And we believe that a better future is to come.”

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Bluesky CEO Jay Graber says X rival is ‘billionaire proof’

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Bluesky CEO Jay Graber says X rival is 'billionaire proof'

Bluesky has surged in popularity since the presidential election earlier this month, suddenly becoming a competitor to Elon Musk’s X and Meta’s Threads. But CEO Jay Graber has some cautionary words for potential acquirers: Bluesky is “billionaire proof.”

In an interview on Thursday with CNBC’s “Money Movers,” Graber said Bluesky’s open design is intended to give users the option of leaving the service with all of their followers, which could thwart potential acquisition efforts.

“The billionaire proof is in the way everything is designed, and so if someone bought or if the Bluesky company went down, everything is open source,” Graber said. “What happened to Twitter couldn’t happen to us in the same ways, because you would always have the option to immediately move without having to start over.”

Graber was referring to the way millions of users left Twitter, now X, after Musk purchased the company in 2022. Bluesky now has over 21 million users, still dwarfed by X and Threads, which Facebook’s parent debuted in July 2023.

X and Meta didn’t immediately respond to requests for comment.

Threads has roughly 275 million monthly users, Meta CEO Mark Zuckerberg said in October. Although Musk said in May that X has 600 million monthly users, market intelligence firm Sensor Tower estimates 318 million monthly users as of October.

Bluesky was created in 2019 as an internal Twitter project during Jack Dorsey’s second stint as CEO, and became an independent public benefit corporation in 2022. In May of this year, Dorsey said he is no longer a member of Bluesky’s board.

“In 2019, Jack had a vision for something better for social media, and so that’s why he chose me to build this, and we’re really thankful for him for setting this up, and we’ve continued to carry this out,” said Graber, who previously founded Happening, a social network focused on events. “We’re building an open-source social network that anyone can take into their own hands and build on, and it’s something that is radically different from anything that’s been done in social media before. Nobody’s been this open, this transparent and put this much control in the users hands.”

Part of Bluesky’s business plan involves offering subscriptions that would let users access special features, Graber noted. She also said that Bluesky will add more services for third-party coders as part of the startup’s “developer ecosystem.”

Graber said Bluesky has ruled out the possibility of letting advertisers send algorithmically recommended ads to users.

“There’s a lot on the road map, and I’ll tell you what we’re not going to do for monetization,” Graber said. “We’re not going to build an algorithm that just shoves ads at you, locking users in. That’s not our model.”

Bluesky has previously experienced major growth spurts. In September, it added 2 million users following X’s suspension in Brazil over content moderation policy violations in the country and related legal matters.

In October, Bluesky announced that it raised $15 million in a funding round led by Blockchain Capital. The company has raised a total of $36 million, according to Pitchbook.

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Alphabet shares slide 6% following DOJ push for Google to divest Chrome

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Alphabet shares slide 6% following DOJ push for Google to divest Chrome

Jaque Silva | Nurphoto | Getty Images

Alphabet shares slid 6% Thursday, following news that the Department of Justice is calling for Google to divest its Chrome browser to put an end to its search monopoly.

The proposed break-up would, according to the DOJ in its Wednesday filing, “permanently stop Google’s control of this critical search access point and allow rival search engines the ability to access the browser that for many users is a gateway to the internet.”

This development is the latest in a years-long, bipartisan antitrust case that found in an August ruling that the search giant held an illegal monopoly in both search and text advertising, violating Section 2 of the Sherman Act.

The potential break-up would include preventing Google from entering into exclusionary agreements with competitors like Apple and Samsung, part of a set of remedies that would last 10 years.

CNBC’s Jennifer Elias contributed to this report.

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