Runlayer and Rippling Drop Lawsuits as MCP Gateway Fight Reshapes AI Security
Runlayer and Rippling dropped rival lawsuits with no settlement or fees, as Rippling launched the MCP gateway at their public legal dispute's center.
Summary
On Wednesday night, Runlayer and Rippling withdrew their respective lawsuits after Runlayer spent three weeks in discovery. Court documents showed no settlement, payment, or exchange of legal fees. Rippling immediately released the MCP gateway at the dispute’s center. Runlayer, an early stage startup unveiled in November 2025, has raised $42 million from investors including Khosla Ventures’ Keith Rabois and Felicis. Third time founder Andrew Berman previously built baby monitor company Nanit and AI videoconferencing tool Vowel, sold to Zapier in 2024. Runlayer said Rippling tested its gateway for more than a year with close engineering cooperation, never became a customer, then had an employee text Berman that Rippling was building what the employee called a clone. Runlayer alleged testing contract breaches. Rippling countersued over patents, which Runlayer viewed as pressure to withdraw while increasing costs.
An MCP gateway securely retrieves data for AI agents without direct system access, such as emails for a recruiter’s top five candidates, while adding employee role controls, observability, logs, and usage trails. Historically focused on payroll and benefits, Rippling entered AI gateways within weeks with model routing and employee token spending dashboards, competing with Stripe, Ramp, and Databricks. Its role linked gateway also puts it in AI security against Runlayer, Docker, and Amazon Bedrock. Runlayer sells a broader gateway based security bundle spanning agent creation and detection of shadow agents unknown to IT.
The fight shows startups that a prospective enterprise customer can become a competitor as AI lowers software building barriers. Long technical evaluations may need redesign because enterprise requirements can shift sharply over months, before a startup secures a sale.
Positives
- Runlayer and Rippling ended both lawsuits without a settlement, payment, or exchange of legal fees.
- Rippling immediately released its MCP gateway with model routing, employee token spending dashboards, and role linked AI access.
- Runlayer has raised $42 million from investors including Khosla Ventures’ Keith Rabois and Felicis.
- Runlayer’s broader security bundle covers agent creation and detection of shadow AI agents operating without IT’s knowledge.
Risks & concerns
- Runlayer spent three weeks in discovery before withdrawing its contractual claims against Rippling.
- Rippling tested Runlayer’s gateway for more than a year, never became a customer, and instead developed a competing product.
- Rippling’s patent countersuit was viewed by Runlayer as pressure designed to increase legal expenses and force withdrawal.
- Runlayer now faces Rippling, Docker, and Amazon Bedrock in AI security, while Rippling also confronts Stripe, Ramp, and Databricks.
- Lengthy enterprise evaluations can expose startups to prospective customers whose requirements shift and who may become direct competitors.