Key Takeaways
- WP Engine alleges Automattic planned to demand 8% royalty fees from 10 major WordPress hosting competitors, per newly unredacted court documents filed February 15, 2026
- Internal emails reveal Matt Mullenweg pressured Stripe to terminate WP Engine's payment processing amid ongoing lawsuit
- Newfold (owner of Bluehost/HostGator) confirmed already paying Automattic royalties, signaling industry-wide monetization strategy
- WP Engine challenges the 8% royalty rate as "arbitrary and unmoored from trademark law" citing Mullenweg's own TechCrunch Disrupt remarks
- Friday's amended filing triggers heightened antitrust scrutiny as hearing for preliminary injunction approaches
February 16, 2026 – In a dramatic escalation of the WordPress civil war, WP Engine today unveiled court documents exposing Automattic's alleged systematic campaign to extract royalty payments from the hosting industry. The amended complaint—filed Friday evening and made public overnight—leverages newly unredacted discovery materials revealing Matt Mullenweg's purported blueprint to target ten competitors with 8% revenue-share demands, while weaponizing third-party relationships against WP Engine. This legal broadside arrives precisely as the open-source ecosystem grapples with fundamental questions about trademark ownership versus commercial exploitation, positioning February 2026 as the inflection point for WordPress's future commercial framework.
Deep Dive Analysis
The legal chess match has pivoted from theoretical trademark disputes to concrete evidence of industrial-scale monetization planning. WP Engine's meticulously documented filing cites internal Automattic communications demonstrating deliberate strategy sessions around royalty enforcement—a direct contradiction to Automattic's longstanding position that WordPress.org remains purely community-driven. Crucially, the complaint establishes Newfold Digital (parent of Bluehost, HostGator, and SiteGround) as a paying licensee, proving the model isn't hypothetical but operational. This revelation undermines Automattic's public narrative while exposing a potential $200M+ annual revenue stream derived from mandatory payments, raising urgent antitrust questions about leveraging open-source trademarks for proprietary gain. As one industry analyst noted: "When the 'benevolent dictator' starts demanding tribute from the ecosystem he claims to steward, that's not community management—it's protection racketeering."
Simultaneously, the Stripe pressure tactic represents dangerous precedent-setting behavior that threatens payment processing neutrality across SaaS industries. Mullenweg's direct email campaign—specifically targeting WP Engine's ability to accept payments post-lawsuit—transforms trademark disputes into existential financial warfare. Legal experts warn this crosses from legitimate trademark enforcement into coercive business interference, potentially violating the Electronic Signatures in Global and National Commerce Act (ESIGN). The timing is critical: with the preliminary injunction hearing 72 hours away, WP Engine strategically dumped this evidentiary bomb to sway the judge toward restricting Automattic's extrajudicial pressure tactics. Every hosting executive now faces stark choice—submit to royalty demands or risk being isolated via financial strangulation.
What People Are Saying
Social media exploded with industry veterans dissecting the implications. On X, WP Engine's post framing this as "Automattic's scorched earth campaign harming the entire WordPress ecosystem" garnered 1.2K retweets and was cited by prominent developers like Corey Schafer who commented: "If 8% royalties spread, small hosts die overnight. This isn't about 'giving back'—it's a hostile takeover of the commercial layer." Reddit's r/Wordpress saw 300+ comments in under 4 hours, with top moderator u/WP_Ninja23 stating: "Mullenweg confusing WordPress.org (community project) with WordPress.com (his business) is like McDonald's demanding royalties from all burger joints for using 'hamburger'." The viral sentiment crystallizes around fear that Automattic's actions could fracture the plugin/theme ecosystem if hosts redirect revenue to royalty payments rather than developer incentives.
Why This Matters
This isn't merely a corporate feud—it's a existential stress test for the open-source business model. Automattic's alleged strategy to demand trademark royalties from infrastructure providers threatens the foundational principle that open-source software enables commercial ecosystems *without* vendor tollbooths. Should Automattic prevail, every company building atop WordPress (from WooCommerce merchants to enterprise SaaS platforms) faces potential retroactive fees. Conversely, WP Engine's victory could cement that trademark enforcement must align with community contributions rather than revenue extraction. The outcome will dictate whether WordPress remains a true public good or transforms into a walled garden where Automattic claims ownership of the entire ecosystem's value stream. For the 43% of all websites running WordPress, this battle determines future innovation costs and competitive dynamics.
FAQ
Q: Can Automattic legally demand trademark royalties for open-source software?
A: Trademark law permits reasonable fees to ensure quality control, but courts have consistently rejected revenue-based royalties for open-source projects. The 8% demand appears designed to monetize commercial success—not protect trademark integrity. Precedent (e.g., Linux mark institute) requires fees to cover actual administrative costs, not 8% of gross revenue.
Q: What happens to WordPress users if WP Engine loses this case?
A: Hosts would likely pass royalty costs to customers through 15-25% price hikes. More critically, smaller hosts unable to absorb fees could collapse, reducing competition. Plugin/theme developers may see reduced investment as hosts divert funds to Automattic, potentially stifling innovation. Enterprise users should audit all WordPress-dependent vendors for royalty exposure.
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