On Wednesday evening, Runlayer and Rippling announced the mutual withdrawal of their respective lawsuits against each other. No settlement was reached, and no funds exchanged hands, including legal fees, as confirmed by court documents reviewed by TechCrunch.
Rippling marked this development by immediately launching its MCP gateway, the very product at the core of the legal dispute and a direct competitor to Runlayer’s offering.
This public confrontation serves as a significant cautionary tale for founders: in the current age of artificial intelligence, where the development of new software has become increasingly accessible, the identity of your next competitor can be highly unpredictable. It may even emerge from a prospective customer.
To recap the brief legal entanglement: Runlayer is an early-stage startup that emerged from stealth in November 2025, having successfully raised a total of $42 million from venture capitalists including Khosla Ventures’ Keith Rabois and Felicis. The company is led by third-time founder Andrew Berman, whose previous ventures include Nanit, a baby-monitor manufacturer, and Vowel, an AI video conferencing tool acquired by Zapier in 2024.
According to Runlayer’s lawsuit, after more than a year of testing Runlayer’s MCP gateway with close collaboration between the two engineering teams, Rippling ultimately did not proceed to become a customer. Instead, Berman reportedly received a text message from a Rippling employee stating that his employer was developing its own MCP gateway and intended to release it as a product. This employee further described Rippling’s upcoming product as a “clone” of Runlayer’s.
Runlayer subsequently filed a lawsuit, alleging that Rippling had violated contractual agreements governing the testing of its products.
An MCP gateway is designed to securely manage an enterprise's AI agent requests for data from various other software systems. For example, when a hiring professional queries for details on the top five job candidates, including their emails, the gateway handles the retrieval from the company's recruitment system, rather than granting AI agents direct access to the core software. This technology can also incorporate additional features such as employee role-based access control (allowing differentiated access for managers versus interns) and observability (providing logs and usage trails).
Rippling then filed a countersuit, claiming that Runlayer was infringing upon some of its patents. Runlayer perceived this action as a strategic maneuver to pressure it into dropping its original suit while simultaneously escalating its legal expenditures.
Runlayer ultimately dropped its lawsuit after three weeks spent in the discovery phase. Rippling also withdrew its countersuit, similarly without any settlement being collected.
Therefore, while the lawsuits amounted to little more than public acrimony, there is a deeper insight for founders. The AI landscape is evolving so rapidly that the protracted technical evaluation processes often imposed on startups by larger enterprises require significant rethinking. Between the initiation of such a process and its conclusion several months later, an enterprise’s needs and strategic objectives may have undergone drastic changes.
In the interim, within a span of weeks, Rippling — historically recognized for its payroll and benefits management — has now entered the AI Gateway market. Its new tool is capable of routing to different AI models and offers dashboards for token spend by employee, positioning it in competition with industry leaders such as Stripe, Ramp, and Databricks.
With this MCP gateway that links AI access to employee roles, Rippling has also established itself in the AI security business. It now competes with entities like Runlayer, Docker, and Amazon Bedrock.
As for Runlayer, its proposition centers on a broader suite of agent security services integrated with its gateway. This offering ranges from facilitating agent creation to detecting unauthorized "shadow AI" agents operating within an enterprise, unbeknownst to its IT department.
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