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Free and open source software in business

Posted on Thu 14 January 2016 in misc • 6 min read

This article is licensed under CC-BY-SA 4.0 which allows commercial use. I will be grateful for notifying me if it's published or printed anywhere outside my blog :)

The average computer user doesn't pay much attention to licenses of the software they use. It seems completely natural to them that some software - like the Windows operating system or an antivirus bundle - must be purchased, while other can be legally downloaded from the Web. Some programs display ads, others install a partner's application or toolbar. There is however a type of software which - even though free - will do none of that. One of the most important kind of application for a regular user - the internet browser - belongs to that category.

Browsers such as Mozilla Firefox or Chromium (known to most people from its branded version - Google Chrome) are licensed as open source. It's code is available to everybody - not only free to use for the end user, but also available to modify by any programmer. Most of them are developed by foundations and consortia which do not yield immediate profit. Still, a lot of business models of even the largest players such as Google, Amazon and Intel are based on open source.

FOSS - Free and Open Source Software is a family of several licenses, all of which grant the following liberties to the user:

  1. The freedom to run the program as you wish, for any purpose
  2. The freedom to study how the program works, and change it so it does your computing as you wish
  3. The freedom to redistribute copies so you can help your neighbor
  4. The freedom to distribute copies of your modified versions to others

They are divided into two main categories, which emphasize Openness and Freedom respectively:

Engineer's openness

One of the champions of "plainly open" software is Linus Torvalds, creator of one of the most groundbreaking innovations both in technology and business: the Linux system kernel. For him, the main reason for granting open access to code is technical excellence - nothing guarantees such great quality of code as reviews conducted by various independent experts. One of the reasons for the famed security of GNU/Linux systems is their transparency and avoidance of "security through obscurity" policies, where creators hide the protection mechanisms, hoping that attackers don't find any gap before a tester does.

The "open" or "permissive" license group consists of (among others) MIT, Apache and BSD. They allow for code modifications not to be published, as well as integrating open software into closed projects and selling it, as long as the final product contains a note listing all of the code's authors. They also forgo any financial claims authors could have to the software.

Open software is often created by developers who want to advertise their skill, as well as companies promoting their software ecosystems - after all, who can provide better support that the application's creator? This model allows technologies to develop commercially at a blazing speed, as is the case with the latest JavaScript tools: AngularJS under MIT and ReactJS under BSD. A lot of consortia decide to use this kind of license for their common products, such as OpenStack.

It can be assumed that the Bitcoin itself wouldn't gain even a fraction of its current popularity, had it not been for its openness (the Bitcoin Core client is licensed under MIT). It's the transparency and ability to adjust to one's needs which granted the cryptocurrency - as an infrastructure - its edge.

Freedom and independence

The other category of FOSS are the free ("as in freedom") licenses, consisting mainly of GNU/GPL and Affero GPL families. Every modification of such software must be published under the same license, and therefore incorporating it into a closed project would force it to share its entire codebase publicly. However there's no limitation on selling the software (with its authors forgoing their financial claims) - as long as a copy of the code is sold alongside the application itself.

The main objective of these licenses is keeping software independent from any organizations which would like to publish their own modified and proprietary versions of it. They're often chosen to assure the proposed infrastructure's neutrality - as with the Linux kernel itself, licensed under GNU/GPLv2 - which is a pillar of both the Web, and the coming Internet of Things.

The term "free software" was coined in 1985 by Richard Stallman, a "GNU saint", purist and a Free Software Foundation founder. He emphasized that only absolutely free software can guarantee of security, freedom and independence - doing exactly and only what it was originally designed to do. In recent years several countries such as China, Russia, Germany and Italy decided to start migrating their public infrastructure to free software solutions in order to minimize their dependence on Microsoft and Apple - companies hugely influenced by US politics.

FOSS in business

Free and open software serves several important functions in business.It isn't just a way of making savings on software licenses (since proprietary solutions may be cheaper), but rather a conscious strategy employed in creating a business plan.

Companies using FOSS are utilizing it mainly for internal purposes - building infrastructure which is later used to create their end user products, which, in turn, don't have to be related to software at all, such as market analysis tools or Video on Demand services. Among these which do create open source end products it's usually a way to build a convenient ecosystem and monetize support for it - as is the case of Canonical and Red Hat.

Finally, opening code often signifies a company's technical excellence and is a very important factor in attracting talented and ambitious developers. Among companies which have decided to create their own portfolios of open tools there are some of the best known in the financial sector, such as Jane Street, Tsuru Capital and Palantir.

Regulations and hackers

In the following years we may bear witness to the growing popularity of FOSS licenses. One of the effects of Volkswagen's Dieselgate was a call for mandating using open source code in car's engines to make it verifiable not only by official commissions, but also third parties. The whole process may in fact prove to be beneficial for the motorization business. But how so?

A lot of entrepreneurs don't value hackers or "security researchers" on the market. Such individuals are usually third parties not involved in the company's standard proceedings, who in their own time conduct a software analysis which entails finding bugs, security breaches and submitting them before they bring about a costly crisis. Giants such as Google and Facebook have led such "bug bounty" programs for years, paying generously for each hole fixed.

There are also chances that an unrelated security enthusiast playing around Volkswagen's engine simulator in their free time might come up with an idea for optimization that hasn't been spotted by the company's engineers, thus lowering production or maintenance costs by several percent. Such a situation is in itself beneficial for the company, not to mention that rewarding a single person for their findings is much cheaper than investing in a full-blown R&D team.

Beyond software

Licenses allowing for free (and open) use of creative resources are present beyond software. One of the most popular is the Creative Commons family, used as the basis of Wikipedia. Another one is Jamendo, a music community which allows to legally download any and all albums from its creators completely for free, all around the world.

There's also a very interesting issue of the growing need for a solution similar to FOSS in the patent world. For decades, law systems around the world have been built only with patent hoarding in mind, which finally led to Patent Wars and the emergence of over 250 thousand patents on smartphones.

Elon Musk decided to liberate some of his company's patents last year in order to build an independent electric car infrastructure. Many people applauded his innovative stance, not noticing that we don't have any legal framework for such a decision, which renders it virtually meaningless. If Elon Musk steps down from his position, the next CEO of Tesla can suddenly demand payments for all the "liberated patents" - and the company's competitors have already pumped millions of dollars into research.

Having that in mind we should treat the FOSS movement and its solutions not just as a curiosity, but as an absolutely valid business strategy. Someday something our competitors ignore might just give us an edge.