Momo responds to NetEase's criticism: Tang Yan will actively defend himself or face lawsuit

Tencent Technology News Momo updated its prospectus on Wednesday and responded to NetEase's attack on the company's CEO Tang Yan. In response, Tang Yan believed that the accusation was without merit and planned to actively defend himself. However, the company cannot predict what further actions NetEase will take against Tang Yan in the future, nor is it certain whether NetEase will initiate a lawsuit against Momo in the future. However, any such court proceedings may have a negative impact on the company and divert management's attention, which may have a significant negative impact on the company's reputation, business and operations.

The day before, just before Momo was to be listed in the United States, the company's founder and CEO Tang Yan was suddenly accused by his former employer NetEase, who said that he had no professional ethics and personal style problems during his time at NetEase. Momo was originally scheduled to be listed on the Nasdaq Stock Exchange on December 11, Eastern Time, with an issue price of US$12.50 to US$14.50. Based on the midpoint, it is expected to raise about US$260 million. As to whether NetEase's criticism will affect Momo's listing plan, further observation is needed.

The following is Momo’s response to NetEase’s criticism in its prospectus :

In November 2014, our co-founder and CEO Tang Yan received a letter from a law firm representing NetEase, which claimed that Tang Yan had established Beijing Momo in July 2011 and launched our app in August. At that time, Tang Yan was still an employee of NetEase, which violated his employment agreement with NetEase and his promise not to compete with NetEase during his employment. The letter required Tang Yan to apologize to NetEase in writing, and NetEase reserved the right to take further action. Tang Yan believes that this accusation is meaningless and plans to actively defend himself.

On December 10, 2014, NetEase issued a formal statement on its website, accusing Tang Yan of lack of professional ethics during his time at NetEase and reviewing his breach of the agreement. We note that there are no accusations directly against our company in NetEase's statement, and almost all of its accusations are against Tang Yan's behavior before he joined our company. Tang Yan has informed us that he believes these accusations are meaningless and he will vigorously defend himself.

We cannot predict further actions NetEase may take, nor can we predict whether NetEase will continue to make public statements or make new allegations against Tang Yan, our company and other executives. Throughout this incident, NetEase has stated that it will defend its rights and interests through court litigation, and we cannot predict the duration or outcome of such litigation. Any legal proceedings, regardless of the outcome, will be time-consuming and distract Tang Yan from focusing on the company's business.

If NetEase prevails in the future in a lawsuit against Tang Yan, Tang Yan's reputation could be damaged and he could be ordered by the court to pay damages or cease any conduct that is deemed wrongful. In addition, although our company was not mentioned by name in NetEase's attorney's letter, we are uncertain whether NetEase will file a lawsuit against us in the future. Any lawsuit could have a negative impact on our company, divert management attention, and have a significant adverse effect on our reputation and business.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.