Deel Accuses Rippling of Corporate Espionage
The legal battle between HR tech startups Deel and Rippling intensifies with new accusations of corporate espionage. Deel has filed an amended complaint alleging that a Rippling employee, holding the title of Competitive Intelligence, impersonated a Deel customer for six months.
This alleged impersonation allowed unauthorized access to Deel's systems, enabling the Rippling employee to analyze, record, and copy Deel's products and business practices. This new development follows Rippling's initial lawsuit against Deel in March, which stemmed from accusations of a Rippling employee spying for Deel.
Deel Claims Rippling CEO Driven by "Petty Revenge"
Deel's amended complaint also includes personal attacks against Rippling CEO Parker Conrad, linking his actions to past experiences at Zenefits. The complaint suggests Conrad is targeting Deel due to resentment towards Andreessen Horowitz, a venture capital firm that backed both Zenefits and Deel.
Furthermore, Deel alleges that Rippling has spread false and misleading information about Deel to the press and regulators. This claim appears connected to a 2023 incident where Senator Adam Schiff requested a Department of Labor investigation into Deel's worker classification practices. Deel denied any wrongdoing at the time.
Financial Performance and Rippling's Response
Amidst the legal battle, Deel revealed it has been profitable for years and generates over $1 billion in annual revenue. A Rippling spokesperson stated the company is investigating the specific allegations and remains committed to fair competition and ethical standards.
The spokesperson also claims Deel's amended complaint backtracks on previous assertions, including removing wording that implied Rippling accessed Deel's board-level information.
Differing Allegations of Corporate Spying
The core of the legal dispute involves two distinct spying accusations. Rippling accuses Deel of paying an employee to gather confidential information, including sales leads, product roadmaps, and customer accounts.
Conversely, Deel accuses Rippling of improperly gathering product information by posing as a customer. This raises the question of whether standard competitive intelligence practices crossed a legal line. The court's decision will have significant implications for how companies gather competitive information.
This ongoing legal saga has already made its mark on the tech industry. The alleged incident of Rippling catching a corporate spy, involving a trap, a smashed phone, and a honeypot, has become a popular anecdote. Even Y Combinator startup Cotool referenced the incident in a recent ad for its security platform.
