Rippling vs. Deel: Legal Showdown with Slack as Key Witness – Deel Denies All Wrongdoing
In a dramatic turn of events in the competitive HR technology sector, Rippling has initiated a lawsuit against Deel, another significant player in the industry. The lawsuit, which spans an extensive 50 pages, claims serious allegations such as racketeering, misappropriation of trade secrets, and unfair competition. Central to the complaint is an employee whom Rippling accuses of acting as a spy for Deel.
Deel Responds to Allegations
In response to the lawsuit, Deel has firmly denied the allegations. A spokesperson stated to TechCrunch, “Weeks after Rippling is accused of violating sanctions law in Russia and seeding falsehoods about Deel, Rippling is trying to shift the narrative with these sensationalized claims. We deny all legal wrongdoing and look forward to asserting our counterclaims.”
The Competitive Landscape of HR Technology
The HR technology industry is fiercely competitive, featuring major players like SAP, ADP, and Workday, alongside numerous startups. Both Deel and Rippling aim to offer comprehensive platforms that cover various HR functions, including:
- Payroll Management
- Recruitment
- Training
- Compensation and Benefits Management
- Onboarding
During prosperous economic times, such as the pandemic, the crowded market presented fewer challenges. However, competition intensifies when the economy falters, especially between companies of similar size targeting the same customer base. For instance, Rippling’s valuation stands at approximately $13 billion, while Deel was last valued at over $12 billion.
Public Tensions Before the Lawsuit
Rippling and Deel’s rivalry has been apparent long before this lawsuit, with Rippling launching a marketing campaign directly targeting Deel. This campaign included a “Snake Game,” where Deel is depicted negatively, accusing it of charging higher fees than Rippling.
The feud escalated when a Deel sales director visited the campaign’s site and interacted with a chatbot, leading to the COO of Rippling sharing the interaction on Twitter. This move raised concerns among customers who perceived it as a form of doxxing.
Legal Evidence and Slack Forensics
A noteworthy aspect of the lawsuit is the reliance on Slack activity as evidence. Rippling’s legal team highlighted that the company logs all user interactions on the Salesforce-owned platform. The lawsuit claims:
- There was a significant increase in activity from an employee referred to as D.S. regarding channels related to Deel.
- D.S. previewed channels containing sensitive business discussions unrelated to his payroll role.
- He allegedly viewed confidential sales strategies specifically related to Deel over 450 times.
The Honeypot Scheme
Rippling reportedly set up a “honeypot” to confirm its suspicions. They created a fake Slack channel, suggesting it contained embarrassing details about Deel, and shared this information with key Deel executives. The lawsuit claims D.S. searched for the channel, confirming suspicions of espionage.
The Dramatic Aftermath
The situation escalated when an independent solicitor attempted to seize D.S.’s phone, leading to a bizarre scene where D.S. reportedly locked himself in a bathroom and allegedly tried to flush his phone down the toilet. According to the complaint, when confronted about violating a court order, D.S. defiantly stated, “I’m willing to take that risk,” before leaving the office.
Rippling has yet to clarify whether it plans to take legal action against D.S. or confirm his identity. While the company provided initials in the lawsuit, the detailed description made it easy to identify the individual, who has since deleted his LinkedIn profile.
The unfolding drama continues to capture attention in the HR tech sector, highlighting the intense rivalry between these two companies. For more insights on legal matters in tech, visit our page on legal updates in technology.
