A group of founders and executives of Tinder have filed a lawsuit against InterActiveCorp (IAC) and its Match Group subsidiary seeking billions of dollars in damages.
The lawsuit highlights that IAC and Match had manipulated financial information, undermined Tinder's valuation and unlawfully "robbed" Tinder employees' stock options. The lawsuit includes allegations that IAC and Match had "repeatedly lied" to the Tinder employees in order to "cheat them out of the money to which they were contractually entitled". This was confirmed to Marketing by a Tinder spokesperson through a press statement.
Under the contracts between IAC and Match and the employees, the more valuable Tinder becomes, the more IAC and Match is required to pay. Written contracts between IAC and Match and the employees required Tinder to be valued on four specific future dates – in 2017, 2018, 2020, and 2021 – when the employees could exercise their stock options and sell them to IAC and Match. This then led to IAC and Match to "fake" a lowball valuation of Tinder, pocketing billions of dollars that they were contractually obligated to pay Tinder employees.
IAC and Match’s misconduct also included concocting false financial information, hiding truthful projections of continued rapid growth and delaying the launch of transformative new products such as Tinder Gold, the press statement said.
It also added that IAC and Match had threatened to fire Tinder executives if they revealed the dating app's worth.
“We were always concerned about IAC’s reputation for ignoring their contractual commitments and acting like the rules don’t apply to them. But we never imagined the lengths they would go to cheat all the people who built Tinder. The Tinder team – especially the plaintiffs who are currently senior leaders at the company – have shown tremendous strength in exposing IAC and Match’s systematic violation of employees’ rights,” Sean Rad, Tinder’s co-founder and first CEO said. The plaintiffs are founders Rad, Justin Mateen and Jonathan Badeen and three senior executives.
“This is an open-and-shut case. The defendants made contractual promises to recruit and retain the men and women who built Tinder. The evidence is overwhelming that when it came time to pay the Tinder employees what they rightfully earned, the Defendants lied, bullied, and violated their contractual duties, stealing billions of dollars. A jury will now hold the Defendants responsible for their multibillion-dollar theft,” Orin Snyder of Gibson, Dunn & Crutcher, attorney for the plaintiffs said.
IAC and Match had previously executed a similar scheme last year when a fake Tinder valuation of US$3 billion was manufactured by the owners. Despite a revenue growth of 600% and user base growth of 50%, the same valuation was assigned to Tinder two years earlier, the statement said.
In addition, IAC and Match had merged Tinder out of corporate existence and into Match group. This led to Tinder diluting into a stagnant holding company. This merger was a pretext to extinguish the Tinder employees’ stock options.
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