On Wednesday night, Runlayer and Rippling dropped their respective lawsuits against each other. Court documents seen by TechCrunch show no settlement was made, no money changed hands, and not even lawyers’ fees were paid. Rippling immediately released the MCP gateway that had been at the center of the dispute, the product that competes with Runlayer‘s offering. The episode is a cautionary tale for founders: in the AI era, building new software has become almost trivial, and you never know who your next competitor will be — it might even be a prospective customer.

Runlayer is an early-stage startup that launched out of stealth in November 2025 and has raised $42 million from investors including Khosla Ventures’ Keith Rabois and Felicis. It is led by third-time founder Andrew Berman, whose previous companies include baby-monitor maker Nanit and AI video conferencing tool Vowel, which sold to Zapier in 2024. According to Runlayer‘s lawsuit, Rippling tested Runlayer‘s MCP gateway for more than a year, with the two engineering teams working closely together, but Rippling never signed on as a customer. Instead, Berman received a text from a Rippling employee saying that Rippling was building its own MCP gateway and planned to release it as a product; the employee described Rippling‘s product as a clone of Runlayer‘s. Runlayer sued, claiming Rippling violated contractual agreements covering the tests of its products.

An MCP gateway securely handles an enterprise’s AI agent requests for data from other software systems. For example, when a hiring professional asks for details on the top five candidates for a job, including their emails, that data must be retrieved from the company’s recruitment system. The gateway handles the retrieval process rather than granting agents direct access to the company’s software systems. It can also layer on features like employee role-based access control, observability with logs and usage trails, and more.

Rippling countersued, alleging that Runlayer was violating some of its patents. Runlayer saw the move as a way to induce it to drop its suit while ratcheting up legal expenses. Runlayer dropped its suit after spending the last three weeks in discovery. Rippling then dropped its own suit without collecting a settlement. The lawsuits led to nothing but public flaming, but there is a deeper takeaway for founders.

The AI landscape is changing so rapidly that the long-running technical shoot-outs that enterprises love to impose on startups need to be rethought. Between the time an AI startup enters into one and however many months later, an enterprise’s needs and desires may drastically change. In the span of weeks, Rippling, whose bread and butter has historically been payroll and benefits management, has now entered the AI gateway market with a tool that can route to different models while dashboarding token spend by employee. The product competes with the likes of Stripe, Ramp, and Databricks. Rippling is also in the AI security business with this MCP gateway that ties AI access to employee roles, competing with Runlayer, Docker, and Amazon Bedrock. Runlayer‘s own pitch is a broader bundle of agent security services tied to the gateway, ranging from agent creation to spotting shadow AI agents running in an enterprise unbeknownst to IT.