UPDATED 15:53 EST / DECEMBER 31 2023


The changing economics of open-source software

The world of open-source software is about to go through another tectonic change.

But unlike earlier changes brought about by corporate acquisitions, this time it’s thanks to the growing series of tech layoffs. These could lead to many projects being crippled because their principals are now unemployed or will get new jobs in less open-favorable companies. The layoffs will certainly change the balance of power between large and small software vendors, and between free and commercial software versions, and the role played by OSS in enterprise software applications could change.

Most analysts agree that open source has become firmly planted into commercial software development, both from the perspective of the vendors who contribute their code back to the world as well as for those end-users who develop applications built around open-source projects.

This position has further solidified thanks to the major boost from generative artificial intelligence. That’s because of numerous AI-related projects that grew exponentially in the past year as developers rushed to implement its routines into their code. AI has brought hundreds of developers into the OSS fold because so much of its code uses various OSS projects, such as PyTorch which began under Meta Platforms Inc. and became its own OSS juggernaut with more than 600,000 code repositories.

Three tectonic shifts

Back in 2009 to 2010, the first major series of changes to OSS came about thanks to Oracle acquiring Sun Microsystems for $7.4 billion. At the time there was much pearl-clutching about the anticompetitive underpinnings, with the European approval held up. Thousands of Sun employees were terminated along the way.

At the time, Sun was home to several significant OSS projects, since it was the home to the principals behind Java, XML, JRuby and other tools. (They all eventually left Oracle, along with Sun’s chief executive, who was one of the first people to resign via a haiku in a tweet.)

The second shift happened almost 10 years later when IBM Corp. acquired Red Hat for $34 billion. The move set in motion a major role for containers and other hybrid cloud technologies.

But now 2023 has brought layoffs into the tech scene. Layoffs.fyi cites more than 220,000 total for the year, including 11% of the workforce at Etsy, 15% at Bill.com, 7% at Domo, 10% at Informatica, 6% of FreshBooks, 16% at Nokia, 18% at Rapid7, 16% at Dropbox, 5% at Atlassian, 5% at VMware, 5% at Dell and 8% at NetApp. Add to that several rounds of layoffs at Spotify, TikTok owner ByteDance, Amazon.com, Twilio, LinkedIn, SecureWorks, Microsoft, Meta and Twitter, which collectively added tens of thousands to the unemployment lines.

The role of the Linux Foundation

Perhaps the biggest center of gravity for open source is the Linux Foundation, which operates a multimillion-dollar, multimodal organization that is focused on open-source support. There are close to 1,000 different software projects under its umbrella. It depends on hundreds of company members that make annual contributions, along with dozens of other providers that donate at higher funding levels, such as Microsoft, Google and Facebook.

But money is only one point of view. The foundation has had a rocky year itself, laying off numerous employees. Part of that was in anticipation of reduced support from the tech companies that shed staff, many of which were high-level foundation supporters. For example, VMware, a platinum member, has pulled its support entirely, along with several other gold-level sponsors.

“This was a shock to the system,” Linux Foundation Senior Vice President Mike Dolan told SiliconANGLE. “We have had to make some adjustments because so many open-systems engineers were let go.” Dolan said there are more than 80 funding initiatives that operate independently under the foundation’s umbrella, such as the Cloud Native Computing Foundation, the PyTorch Foundation, the Hyperledger Foundation and the Overture Maps Foundation.

“The problem now is that especially in the operating system and financial services markets, there is a large uptake in consumption of open-source code, but the contributions back to the community and commitments to fixing code is lacking,” said Jason Perlow, a longtime OSS advocate who was one of those laid off this month at the foundation. He told SiliconANGLE that what is missing is what’s called an “open source program office, which is used to cultivate and track an organization’s OSS code and coordinate changes.”

Red Hat, long a poster child for OSS, has lately seen a reduced effort with contributing its code, according to Perlow. Much of this could be caused by funding pressures to operate these offices, especially as the software industry shrinks.

It’s all about collaboration

Dolan mentioned one oft-cited benefit of OSS, which is collaboration. “True innovation can’t happen without collaboration,” the foundation’s year-end report says. Several of its events and efforts brought together a variety of legal, engineering and other technologists to further OSS goals. Dolan mentioned a HyperLedger project called Circulor that brought together different  battery vendors to work on a common set of standards.

But it isn’t all singing kumbaya around the campfire. In 2023, there were two other events that shook the OSS foundational tenets, both involving conflicts over licensing. Meta released the latest version of its Llama large language model as OSS, as long as it wasn’t heavily used by an enterprise, in which case companies would have to pay a fee to license its use. And HashiCorp Inc. changed its licensing terms for Terraform from OSS to fee-based.

Despite or perhaps as a result of its own layoffs, Microsoft has moved into a more critical role for OSS in the past year. It continues to extend its Azure cloud footprint using a wide variety of OSS technologies, including Linux.

“Microsoft has become the best OSS citizen in terms of engineering talent and funding,” Perlow said. “More than 40% of Azure are running Linux and OSS workloads, and most of its infrastructure doesn’t have anything to do with Microsoft software at all.”

It is too soon to tell whether OSS is too deeply entrenched or will suffer these staffing setbacks in 2024 and beyond. But clearly it will have some major changes ahead.

Image: Alpha Stock Images

A message from John Furrier, co-founder of SiliconANGLE:

Your vote of support is important to us and it helps us keep the content FREE.

One click below supports our mission to provide free, deep, and relevant content.  

Join our community on YouTube

Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.

“TheCUBE is an important partner to the industry. You guys really are a part of our events and we really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy