The lesson Elastic’s restrictive relicensing teaches is that those using open source to ratchet a software startup will forsake software freedom eventually if they’re aggregating rights. That’s no reason to believe open source needs updating.

Many of the responses to the decision of Elastic to drop open source licensing for their products and instead use restrictive commercial licensing have involved asking whether they were justified to do so based on market conditions (especially the provision of a service by Amazon Web Services) or diving into the minutiae of what they actually did. Some see it as support for the hypothesis that the very definition of “open source” is out of date. But to do so is to swallow the bait of distracting explanation and overlook the actual value of open source and why Elastic — and the cloud databases before them — no longer care about it.

Open Source Effect

It’s important we understand the network effect companies are exploiting as they seek to successfully use it to ride the Innovator’s Dilemma into new markets. When we advocate for open source we advocate for the disruptive network effect free software produces stochastically.

The open source effect everyone seeks happens when developers go ahead solving problems using the solutions of their predecessors and peers, without having to constantly ask for approval. Developers use solutions that deliver the capabilities they want with the least bureaucratic friction. Adoption then spreads organically.

As they deploy, they fix bugs, report problems and improve capabilities, pooling the innovation — not least to reduce the drag of maintenance — because of the software freedoms they enjoy from the OSI-approved licensing. Great code, innovative deployers and rapid improvement catalyse exponential adoption. When you are startup with no sales pipeline, that exponential adoption is gold-dust.

The Rights Ratchet

Elastic, like many companies before them, apparently have scaled to the point where they no longer need the “open source effect” to deliver market share through developer-led adoption – they’re transitioning into market management. Consequently they have no concerns about taking actions that, had they had not already secured market adoption, would prevent it happening, such as changing to non-open source licensing that makes developers ask for management or legal advice first or that erects insurmountable barriers to compliance. They want to carry on pretending they love open source developers though, so they seek out a way to blame others (and open source itself) for the change.

Elastic may be blaming AWS for their actions but in truth their most recent quarter shows no signs of AWS harming them and they are simply moving along the life-cycle of a certain kind of open source exploitation model — in many ways pioneered over the previous decade by SugarCRM. The rights ratchet model uses open source to secure adoption and market acceptance and then gradually removes viable open source freedoms as they seek to control their customers and ecosystem and increase revenue from them.

Eventually companies on this trajectory have only a proprietary product dependent on lock-in for customer retention and with no aspect of software freedom — even SugarCRM, once a pioneering darling of the open source movement, eventually shut down its open source “community edition”. Initially companies following this model argue they are “still open” and that people like OSI arguing they are not are just “self-appointed gatekeepers” but in the end this stops too when there’s no risk of customer attrition.

The tools for the removal of software freedoms are relicensing and the contributor agreements that enable it by giving the company effective rights over the whole codebase (either by copyright transfer or by the grant of licensing rights equivalent to ownership – it makes little difference). Having aggregated rights also conveniently means the company doesn’t have to comply with the project’s open source license itself. These “business-friendly” licenses and CLA terms (and the purported “threat” that led to their use) can be fascinating and often become the focus of attention, as they have in this case. But they aren’t really what matters in and of themselves — it’s all about the pivot they are hiding.

Despite the best efforts of various startups and their VCs to call for “a new open source” and to blame on Amazon the ratcheting of their strategy along a well-tested trajectory, all we’re seeing is more examples of the usual grift. Elastic (and the other cloud database startups before them) are not struggling for revenue under a tide of abuse, and open source is not somehow “out of date”. They are just seizing a prominent excuse to turn the rights ratchet the way their investors expect.