Ozy Media sued Buzzfeed, Semafor and its co-founder Ben Smith, claiming they stole trade secrets from the embattled news site after Smith helped tank its business with a devastating expose, according to court papers.
The suit filed Thursday in Brooklyn federal court claims that Smith gained insight into Ozy’s operations when he led Buzzfeed, which was “targeting” the startup for acquisition in 2019.
The suit claims Smith was a major player in an ultimately unsuccessful merger between the two websites — and then used confidential information from those talks to blow up Ozy in a series of articles for The New York Times.
The suit also alleges that Smith then replicated Ozy’s investor and revenue strategies when he created his own media company, Semafor in 2022.
“Semafor was a spitting image of the media company that Carlos Watson had formed a decade earlier: OZY,” the lawsuit alleged.
Court papers claim Smith, who decamped from Buzzfeed as editor-in-chief in 2020 to become the media columnist for the Times, engaged in a conflict of interest by retaining a stake in Buzzfeed while covering the media industry.
During his two-year tenure as The Times’ columnist, Smith wrote a blistering item that Samir Rao, Ozy’s co-founder and chief operating officer, impersonated a YouTube exec in a meeting with investors at Goldman Sachs — actions that would later lead to a federal prosecution against Watson and a guilty plea from Rao.
Smith also reported on claims that Ozy had wildly inflated its audience numbers in public statements in order to bilk investors out of millions of dollars.
“Ben Smith’s decision to write a series of hit pieces about Ozy Media while misleading his readers and the public about his central role in BuzzFeed’s efforts to buy Ozy two years earlier, holding an equity stake in BuzzFeed, and preparing to launch his own media company, was a blatant violation of his legal obligations and basic journalistic ethics,” said Dustin Pusch, partner and co-Founder of Meier Watkins Phillips Pusch and attorney for Ozy.
A rep for Buzzfeed declined to comment. A rep for Smith and Semafor did not immediately respond to requests for comment.
Advertisers and investors stopped working with Ozy, causing the site to close down its operations and lay off its entire staff. The Securities and Exchange Commission, investors and insurers all sued Ozy as Watson made fruitless attempts to revive the site in 2022 and 2023.
Earlier this year, Ozy and Watson were themselves criminally charged for scheming to defraud investors of tens of millions of dollars by misrepresenting the company’s debts, financial performance and audience size. Both pleaded not guilty.
Watson’s criminal case is scheduled to go to trial in May, according to court papers.
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