I put this topic on my kanban board in August of 2023. At the time, Hashicorp had just angered a lot of people by switching their popular tools to the Business Source License (BuSL). This was not long after Red Hat angered a lot of people by changing how they made source code for Red Hat Enterprise Linux (RHEL) public. While the anger was numerous and voluminous, my suspicion was that it didn’t matter.

The people who buy enterprise software are, by and large, not the enthusiasts who care about the practical or philosophical importance of open source software. You can anger the nerds (I use that term with endearment, as I am one, too) all you want, because they’re not the ones who sign the checks. This is a cynical take, but Hashicorp’s subsequent (pending) acquisition by IBM would seem to reinforce it. Much of the analysis I read at the time suggested that switching to the BuSL was part of Hashicorp trying to be more appealing to potential buyers and perhaps the reason that IBM made the acquisition offer. I’m not convinced of the latter, since IBM was willing to pay a lot more for Red Hat, who open sourced everything*.

It doesn’t seem to matter

Shortly after the Hashicorp acquisition was announced, SJVN wrote an article in which he noted that IBM’s share price had fallen 8% on the news. This, combined with the fact that Hashicorp stock fell 22% between the announcement of the BuSL switch and the acquisition news, led him to wonder if the acquisition was a “blunder” on IBM’s part. But as of Friday’s close, just over four months since the news was announced, IBM shares are up almost 10% from the pre-announcement price and have reached a one-year high. If the price isn’t quite at an all-time high, it’s within spitting distance of the 2013 peak.

But now we have actual analysis. RedMonk analyst Rachel Stephens published an article last week examining the effect of license changes on Hashicorp, MongoDB, Elastic, and Confluent. You should read the whole article, but the quick summary is that the license changes appear to have no impact on revenue. The changes in valuation and net income are a little messier, but the conclusion holds: “here does not seem to be a clear link between moving from an open source to proprietary license and increasing the company’s value.”

Importantly, though, the analysis does not show a clear link between moving to a proprietary license and decreasing the company’s value. It’s a small sample size, but the best we can tell, changing the license doesn’t matter either way. If your primary business is enterprises, not SMBs or individuals, there’s little evidence that a change that angers practitioners matters, at least in the short term.

What about Elasticsearch?

Elastic dropped a surprise on Thursday. They announced that Elasticsearch is once again open source, this time under the AGPL. Elastic announced a change from the Apache Software License in January 2021, driven in part by issues with Amazon Web Services. Does this mean they finally caved to pressure from the people who were upset about the initial change?

I don’t think so. On the same day Elastic announced the shift to the AGPL, they also released their quarterly earnings. Although the earnings and revenue beat expectations, the company cut their guidance from the coming quarter. The market was displeased, and about a quarter of Elastic’s market value went poof in a single day.

I’m not a market analyst and I don’t have any inside knowledge, so the best I can do is speculate based on what I know about the software industry. But my take is that this license change is less about responding to the pressure from open source fans and more about reducing ambiguity for potential adoptees. The Server Side Public License has some vague terms that could scare away someone trying the free offering, and a better-known license can remove that friction. Is this a win? Maybe, but not a philosophically-driven one.

Elastic’s re-re-license announcement mentions working issues out with AWS. The fact that they switched to the AGPL seems like a defensive move against future perceived shenanigans. If this is the primary motivator, then it seems like the move away from open source was successful and justifies the first license change.

So what do we do?

Anger from practitioners doesn’t seem like a meaningful consequence, so how do we prevent the sort of license changes that have caused such a stir in the last few years? If I had an easy answer, I’d get paid a lot of money as a consultant. (Spoiler: I do not get paid a lot of money as a consultant.)

But it’s clear when making the case for open source at our employers that we should not rely on philosophical arguments (because those only work when money is cheap and times are good). Nor should we rely on a “this will kill us with enthusiasts” because it turns out that might not matter.

The case for open source has to be presented in terms that matter to the business. This doesn’t have to be revenue or profit, which is good since the links are not always direct. But it does need to connect in clear, direct ways to the business’s goals, strategy, or other decision influences.