May 25, 2022

StrategisChhr

Skillful Business Crafters

Start-up Muzmatch entwined in naming battle with dating giant Match

Since launching Muzmatch out of his bedroom in north London a decade ago, Shahzad Younas has worked 18-hour days to build the Muslim marriage app with 5m users worldwide.

But over the past year, he has been fighting a lawsuit that threatens the company’s future brought by Match Group, the dating giant that owns far bigger services including Match.com, OkCupid, Tinder and Hinge.

“I’m exhausted,” he told the Financial Times. “My motto is always got to put everything into it. No regrets.”

Muzmatch was the defendant in an Intellectual Property Enterprise Court last week in a trademark claim brought by Match, the Nasdaq-listed conglomerate with a market capitalisation of almost $33bn.

The group has accused Younas of “piggybacking” off its intellectual property, largely for also using the term “match” in Muzmatch’s name and branding. The start-up argues this refers to the act of matchmaking.

The legal battle shines a light on the dog-eat-dog online dating industry, pitting a niche upstart against a global behemoth with a record of snapping up smaller players. Texas-based Match has also previously been involved in legal disputes with the founders of rival Bumble and Tinder, as it seeks to defend its position as the world’s dominant dating company.

Younas claims Match made four approaches to buy Muzmatch, culminating in a dinner in 2019 at The Ivy restaurant in London where he rejected a final offer of $35m. Match said it was approached by Younas for acquisition talks.

The Muzmatch platform caters for Muslim dating with specific features to serve that community, including an optional chaperone, the possibility to blur photographs and automatic censors on foul language.

It emphasises marriage as the ultimate goal of connections on the platform, distancing it from casual dating apps that Younas said did not align with Islamic values. The company manually reviews each profile and complaints from users.

Match, whose shares have fallen more than 30 per cent since an October peak after revenues missed analysts’ expectations, argued in court filings that “this is a clear case of freeriding on the repute of the UK market leader in order to become a major player in the online dating and introductions market”.

Younas argued that it would be “problematic” to align itself with Tinder’s parent company, because its reputation for casual dating conflicted with Muzmatch’s more conservative religious ideals around marriage.

Younas, 37, launched Muzmatch as a website in 2011 while working as an investment banker at Morgan Stanley. He quit his job three years later, teaching himself to code and designing the first app in a Word document.

The London-based app, unveiled in 2015, operates in 190 countries, crediting itself for helping to set up 100,000 weddings worldwide.

Younas said he had spent almost $1m challenging Match’s claims, relying on Muzmatch’s revenues from premium subscriptions and in-app purchases, and funds raised in its $7m Series A round led by US hedge fund Luxor Capital and Silicon Valley accelerator Y Combinator.

Muzmatch’s filings to UK’s Companies House do not include annual revenues, suggesting its turnover does not breach the £10.2m threshold at which companies must report more detailed financial statements. Match made annual revenues worth $2.4bn in 2020.

Even if Younas wins, he will have lost the majority of the legal costs, which are not repaid in intellectual property disputes.

“I’ve been very disciplined in the business financially . . . you always have to prepare for bad days because it always comes,” he added. “We’ve always kept a healthy buffer.”

Both parties examined more than 50m records of company interactions with users between the Muzmatch brand and Match. Three cases were cited by Match as evidence of confusion between the two groups. Match also argued that Muzmatch used “match” and “Tinder” in its website metadata to drive traffic to the platform.

Younas said in court that these were standard search optimisation strategies to increase the company’s ranking on website search pages, reiterating that “match” was used as a descriptive term for matchmaking and “Tinder” was what western non-Muslims searched for as a comparison when trying to frame the product in their minds.

“We think the evidence shows Muzmatch has unquestionably benefited from its perceived association with Match,” a Match spokeswoman said in a statement. “This is why Muzmatch has fundamentally redesigned their product and removed references to our services.”

Muzmatch caters for Muslim dating with features to serve that community, including an optional chaperone and the possibility to blur photographs

Over the past decade, Match has built up a portfolio of more than a dozen dating platforms to become the single largest player in the fiercely competitive matchmaking industry. Last year, it bought South Korean social discovery company Hyperconnect for $1.7bn as it continued a push into new geographies.

However, it has regularly faced clashes with competitors. Female-friendly dating app Bumble has in the past accused Match of attempts to buy, clone and “intimidate” the company before both parties settled several lawsuits in 2020 over allegations of patent infringement and theft of trade secrets.

In December, Match agreed to pay $441m to the founders of Tinder to settle a lawsuit over claims the group and its former corporate parent IAC had cheated them out of billions of dollars by severely undervaluing the casual dating app before its 2017 acquisition.

Match sued Muzmatch last year for allegedly copying Tinder’s swipe feature, which was settled without admission of liability and Muzmatch quickly removed the gesture.

Match.com also argued the Muzmatch font looked similar to its branding and both have used a heart icon in their logos. Muzmatch has argued that hearts are synonymous with dating services and represent love. But in 2016, Muzmatch replaced the heart with a butterfly, which Younas said was because he didn’t want his app to be confused with competitors.

“Somebody [once] told me, my problem is that I don’t respect authority,” he said of why he is pursuing the case in court. “A lot of founders don’t really like having a boss, I like being in control of my own destiny.”

That destiny is in the hands of Judge Nicholas Caddick in the UK’s intellectual property court, who will make his decision in a few weeks.

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