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Elastic vs AWS: Can commercial open source survive the cloud?

Elastic is the latest commercial open source developer to cry foul at AWS's practices. But is the model viable in the cloud era?

The developer of two popular commercial open source products has switched to a new licensing model in the face of what it describes as “ethically challenged” behaviour by AWS. The move highlights an increasingly fraught relationship between the hyperscale cloud providers and the commercial open source software industry.

Elastic is a commercial company that develops the open source search platform Elastisearch and data visualisation tool Kibana, among other products. It sells premium versions of this software, as well as support and consulting services, to customers including Pfizer, Adobe and Cisco.

Elastic AWS open source
Shay Banon, Elastic founder and CEO. (Photo by Richard Wöber/Wikimedia Commons)

AWS, meanwhile, has sold a cloud-hosted version of these tools, named Amazon Elasticsearch Services, since 2015, as it is entitled to do under the Apache 2 license under which they were originally released. It has been estimated that AWS earned $100m in revenue from its top 100 Elasticsearch customers in 2018.

But earlier this month, Elastic founder and CEO Shay Banon announced that the company is moving to a dual-licence model, meaning that providers such as AWS, which sell cloud services based on these products, will have to pay to do so.

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Elastic takes on AWS

The move is a response to what Banon described as “ethically challenged behaviour” by AWS in an explanatory blog post. He alleged that AWS infringed on Elastic’s trademark and incorporated proprietary features owned by Elastic in its cloud-hosted version. Banon said the change was a “last resort” for Elastic as he considers Amazon’s conduct to be “inconsistent with the norms and values that are especially important in the open source ecosystem”.

Amazon says it has done nothing wrong and believes that by moving away from the open Apache 2 licence Elastic is “trying to claim the benefits of open source while chipping away at the very definition of open source itself”. This weekend, AWS announced it is creating its own versions of Elasticsearch and Kibana based on the freely available code, rather than deploying the core product.

Elastic’s decision has been criticised by open source pioneers such as Lucidworks co-founder Grant Ingersoll, who said in a Twitter thread that Elastic had benefitted considerably from its relationship with AWS.

But Elastic is not the first commercial open source company to change its licensing model in response to AWS. In 2018, database provider MongoDB moved its core product to SSPL because it said cloud providers were “testing the boundaries” of what was permissible under the Apache open licence.

Redis Labs also took similar steps to address alleged “strip mining”, where cloud providers use free, community-generated code for profit while contributing little to its development. “AWS are simply poaching open source investment,” Redis Lab’s then-CMO Manish Gupta said at the time. “They want to leverage and monetise the free world and cloud has become the new real estate.”

And in 2019, the New York Times reported that seven CEOs of software companies had met to discuss suing AWS for alleged strip mining. AWS strongly denied any such wrongdoing.

An existential threat to commercial open source

These moves reflect a fundamental tension between the commercial open source model, in which businesses maintain open source products and sell ‘premium’ versions and associated services, and the cloud computing market, which is dominated by a handful of suppliers.

Bruce Momjian, a senior developer on the PostGres open-source database platform, compared the cloud provider’s role to that of a supermarket in a blog post earlier this year. For open source software vendors, cloud providers “allow access to much larger markets for most single-product producers, but they have negatives”, he wrote. “They become the place consumers associate with your product; they have the relationship with the consumer; you can easily be replaced if a better product appears; [and] they take a mark-up.”

This tension poses an existential threat to commercial open source providers, Momjian explained. “Just as bakeries, flower shops, produce markets, meat, cheese and seafood sellers struggle to survive when supermarkets provide convenient, if somewhat less diverse, products, so company-controlled open source will suffer from cloud vendors,” he wrote.

This in turn could threaten the pace of innovation for businesses. Open source adoption is a defining characteristic of companies that are highly effective at software development, a study by McKinsey found last year. And according to a survey of IT leaders by commercial open source giant Red Hat, the majority of open source adoption by enterprise organisations is of ‘enterprise’ (commercial) open source software. Respondents said they expect the adoption of commercial open source to overtake proprietary software in the next two years.

But if commercial open source vendors cannot survive in the shadow of AWS, it may not be as viable a strategy as IT leaders believe it to be today.

Matthew Gooding

Senior reporter

Matthew Gooding is a senior reporter on Tech Monitor.