Grab your popcorn for this one. A dramatic corporate espionage case has unfolded in the HR technology sector between software unicorns Rippling and Deel.
On Monday morning, Parker Conrad, Rippling’s billionaire founder, posted on X that his company sued competitor Deel alleging that Deel had planted a spy inside of their organization. The 50-page lawsuit alleges racketeering, misappropriation of trade secrets, tortious interference, unfair competition, and aiding and abetting a breach of fiduciary duty.
The Allegations
At the center of Rippling's lawsuit is the claim that an employee was working as a spy for Deel, systematically accessing and sharing confidential business strategies and sales data. According to the filing, this alleged corporate espionage was detected through unusual patterns in the employee's Slack usage.
The complaint states that beginning in November 2024, the employee began "previewing channels at a rate orders of magnitude greater than he had before," focusing particularly on channels containing sensitive sales discussions about Deel. Rippling claims the employee viewed channels related to competitive intelligence about Deel over 450 times.
Rippling alleges these channels had "no connection to his payroll operations job responsibilities" but instead contained "the most sensitive of the Company's Sales and Marketing Trade Secrets and confidential business information."
The Honeypot
According to the lawsuit, Rippling set up a "honeypot" to confirm its suspicions. The company created a fake Slack channel, shared its name with key Deel executives, and monitored whether the suspected employee would search for it. The filing claims that he did search for the channel, which Rippling presents as evidence of coordination with Deel.
The confrontation that followed certainly smelled funny. When an independent solicitor attempted to seize the employee's phone by court order, the employee allegedly locked himself in a bathroom, was heard "doing something" on his phone, and potentially tried to flush it down the toilet. The lawsuit states the employee then "stormed out of the office and fled the scene" after saying "I'm willing to take that risk" when warned about violating a court order.
Market Context
Both Rippling and Deel compete in the crowded HR technology space, offering all-in-one platforms for payroll, recruitment, benefits management, and onboarding. They face competition from established players like SAP, ADP, and Workday, along with numerous specialized startups. The companies are remarkably similar in size and valuation. Rippling is valued at just over $13 billion, while Deel was last valued at more than $12 billion. This close competition appears to have fueled an increasingly public rivalry.
Prior Tensions
The lawsuit represents an escalation of tensions that have been building publicly between the companies:
- Last year, Rippling launched a marketing campaign directly targeting Deel with a "Snake Game" that portrayed Deel as selling snake oil and claimed they charged higher fees
- When a Deel sales director visited the site and engaged with a chatbot, Rippling's COO later posted the exchange on Twitter
- Both companies have faced scrutiny over compliance with Russian sanctions
Deel's Response
Deel has categorically denied the allegations. In a statement to TechCrunch, a spokesperson said: "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."
What Happens Next
The lawsuit sets the stage for what could be a lengthy legal battle between two of the fastest-growing HR technology companies. As the case proceeds, more details will likely emerge about the competitive dynamics between these rivals and their sales and marketing strategies.
Rippling has not confirmed whether it intends to file a separate lawsuit against the employee at the center of the allegations. We’ll be following the story as it unfolds and keep you updated in future newsletters.
