Comment by markx2 | Hacker News Reader

Comment by markx2 | Hacker News Reader

How can the 'Fee' possibly be justified?

"2. Fee. In exchange for the License Grant, WP Engine shall do one of the following:

(a) Pay Automattic a royalty fee equal to 8% of its Gross Revenue on a monthly basis, within fifteen days of the end of each month. "Gross Revenue" means all revenue generated by WP Engine from the sale of its services, calculated without deductions for taxes, refunds, or other costs. WP Engine will also provide Automattic a detailed monthly report of its Gross Revenue within fifteen days of the close of each calendar month, including a product line breakdown of all revenues generated. Automattic will have full audit rights.

(b) Commit 8% of its revenue in the form of salaries of WP Engine employees working on WordPress core features and functionality to be directed by WordPress.org. WP Engine will provide Automattic a detailed monthly report demonstrating its fulfillment of this commitment. WordPress.org and Automattic will have full audit rights, including access to employee records and time-tracking.

(c) Some combination of the above two options'

ref. https://automattic.com/wp-content/uploads/2024/09/term-sheet... -- for those unsure where this quote comes from.

It's hard to imagine how any one can read that as anything other than extortion, and at least, that WP Engine's claims are verbatim correct. The level of self-awareness in operation here is concerning, as in, it's kinda spiraling-out-of-control behaviour.

Is there much of a way back reputationally for Mullengweg and Automattic now? When does this start seriously impacting trust in WordPress, if it hasn't already? I'm bemused by it all.

8% of *gross revenue* is comical. That's easily their entire profit margin, if not more so. It's hard to imagine anything so out of touch with reality.

The only way out of this would be, "im having a mental breakdown, i'm retracting everything, please bear with me for 6mo"

But OTOH spending 8% of gross revenue on developing the core of all their products and services isn't ridiculously high. It may well be more than typical, but not ridiculously so.

Should they also spend 8% of their revenue on contributing to linux?

Their stack is basically LAMP+Wordpress. 8% on that? I think that's reasonable.

More to the point, while WP Engine had the same right as everyone else to download and install the open source software they use, the right to download, install and use doesn't generate a duty for anyone to supply WP Engine with updates, not even for important things like security fixes. It also doesn't generate a duty for the maintainers to treat WP Engine civilly. Or a duty to serve WP Engine in any way.

Someone who operates a free service to all comers is almost 100% free to stop doing that — or at least not constrained by WP Engine's having downloaded or installed some software. Want to firewall away Iran from your free service? No law prevents you. Want to firewall away WP Engine? Again, no law prevents you, and WP Engine appears not to want to sign a contract that would prevent it.

Normally, we go a little further than the law requires of us. WP Engine's made it fairly clear that it's not going further than required of it, so I don't think it has any right to expect more of Automattic/Wordpress.org than the law requires of them.

(FWIW, I've been in this situation: I've been a full-time maintainer of popular open source code, and some people expected me to do work that they didn't see any reason to pay for.)

> 8% of gross revenue is comical. That's easily their entire profit margin, if not more so.

The cheapest wordpress hosting plan they have is $20/month. Even if they gave every site its own dedicated hardware (they dont), gross margins would be over 50%. Since their hosting infrastructure is shared, actual gross margin is probably over 90%.

8% is still an unreasonable ask, but it shouldn't be anywhere close to their entire net profit.

So as long as they dont have staff, or other costs, we're sure they'll be fine.

Most likely an opening offer to be negotiated down to 3-5% would be my guess.

This looks very strange:

"Automattic will have full audit rights."

"WordPress.org and Automattic will have full audit rights, including access to employee records and time-tracking."

Agree with this. Is this correct?

It's there in the Fee section.....

I get that regulatory bodies should have access under certain conditions, but letting a competitor do this? Makes zero sense.

Well it's basically saying, just give us the money. The "audit rights" only apply if they're donating time, so they want that to be the most difficult and intrusive option -- ie., its only there for PR.

The choice is, "some money and we'll look the other way; or open all your books, and donate 8% of your workforce to wordpress"

The 'audit rights' are written at the end of 2(a) and apply to just giving money. It's not just time.

You're right, I should've focused on the " including access to employee records and time-tracking " aspect

isn't that necessary given the request of a revenue percentage?

Could automattic know the exact numbers in a different way, since WPEngine is not a public company?

Surely this would be a violation of HIPAA, Privacy and any number of state laws.

You can't just give out confidential employee records to third parties.

None of these parties are subject to HIPAA.

Employee health records are often stored in third party systems that are subject to HIPAA.

Point is that Automattic would have full access to this as well.

Those providers may be subject to it.

Attempts to go fishing in such records would be pretty unlikely to succeed; it'd be an uneforcable request contrary to public policy, with no relevance to such an audit. It would be correctly and easily fought.

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