The Digital Economy Runs on Open Source. Here’s How to Protect It.

Hila Lifshitz-Assaf
By Hila Lifshitz-Assaf and Frank Nagle
Though most people don’t realize it, much of the technology we rely on every day runs on free and open source software (FOSS). Phones, cars, planes, and even many cutting-edge artificial intelligence programs use open-source software such as the Linux kernel operating system, the Apache and Nginx web servers, which run over 60% of the world’s websites, and Kubernetes, which powers cloud computing. The sustainability, stability, and security of these software packages is a major concern to every company that uses them (which is essentially every company). But unlike traditional closed-source software, which companies build internally and sell, FOSS is developed by an unsung army of typically unpaid developers, and is typically given away for free.

In the last few years, we have observed an increase in the active role of corporations in open source software, by either assigning employees to contribute to existing open source projects or open sourcing their own code both to allow the community to utilize it and to help maintain it. As companies have made FOSS part of their business model, they have also acquired important FOSS producers. Two years ago, IBM purchased Red Hat, one of the most successful companies built around FOSS for $34 billion. A year before that, other tech giants paid billions to acquire a stake in FOSS, most notably Microsoft (bought GitHub for $7.5 billion) and Salesforce.com (bought MuleSoft for $6.5 billion).

The corporate world’s entry into free and open source online communities has caused some serious concerns and friction. Acquisitions of FOSS producers could lead to a crowding-out of volunteer contributors to an extent that threatens the future health of the FOSS ecosystem. Further, the world’s largest cloud providers have built multi-billion dollar businesses on top of FOSS components, leading FOSS contributors to wonder why they are spending their free time making the rich richer. Such actions can deter volunteers from contributing, threatening the underlying ethos of the FOSS community.

One particularly contentious case is the recent conflict between Elastic vs. Amazon. Elastic, a public company whose Elasticsearch software powers search activity on numerous corporate websites like Walmart and Audi, battled with Amazon after the online giant took a version of Elasticsearch that Elastic had made open source, repackaged it, and sold it to their customers under nearly the same name. Elastic argued that essentially Amazon took free code that created value for the whole community, and walled it off so that they were the only ones who could capture value from it.

Read the full HBR article
Hila Lifshitz-Assaf is an Associate Professor of Technology, Operations and Statistics at NYU Stern.