The Rise of Open Source: Challenges and Opportunities in the Eventual Fall of Proprietary Software

12.05.2024| Christian Kreutz
Network graph of Matrix protocol
Network graph of Matrix protocol

The past decades in the software world have been dominated by the clash between open source and proprietary software. There are ongoing debates about the pros and cons of the two variants of creating, maintaining, and selling software. More fundamentally, the debate revolves around the concept of software as a digital commons —a resource that can be freely accessed, used, and shared by anyone. This picture becomes clear when you visit GitHub or GitLab and browse through the different software repositories that are completely open in their code base, as well as in their discussions and development history.

In my view, the pro and con debate for open source vs. proprietary software is somewhat of a distraction. First, open source was demonized, then it became successful in certain areas, and now it is discussed in terms of pros and cons until it becomes the standard modus operandi. In reality, the software development industry is already changing its business models, attempting to extend the vendor lock-in logic from proprietary software businesses. Now it is called „software as a service“, and ironically, these services themselves rely largely on open source software. They are basically already working on business models using open source software without contributing much back to the open source community. This is a new form of vendor lock-in, where the software used is mostly open source, but the services are not.

The Whole World is using Open Source Software and Contributing Little Back

Major technology companies have anticipated this trend and are strategically releasing machine learning libraries, such as Google's TensorFlow and Meta's PyTorch, as open-source software. While this may seem like a generous gesture, it is primarily intended to incentivize users to utilize their cloud technology offerings (e.g. Google) when working with these libraries. However, big tech companies rely heavily on open source software, which has already led to licensing issues, and only a tiny fraction of their software is released as open source.

We have reached a point where a significant portion of global software development, spanning both small and large companies, heavily depends on open source software. Websites, mobile applications, and other digital products are almost exclusively built using open source components. The reason for this is simple: it is neither practical nor cost-effective for companies, even large ones, to develop everything from scratch. I have witnessed various instances where companies have squandered substantial amounts of money attempting to recreate products that are already available on the market or as open source software, only to fail miserably. Similarly, companies that rely solely on proprietary software business models face intense competition from increasingly sophisticated open source alternatives, unless they have successfully identified and capitalized on a profitable niche market.

However, there is still a significant gap between the demand for and supply of certain types of software. Many organizations require specific solutions that are either not available as open source or lack the necessary quality and features. This scarcity can be attributed to a chicken-and-egg problem: without sufficient demand and willingness to invest in open source alternatives, the development and maturation of these solutions will remain stagnant. Fortunately, this situation is gradually changing as a growing number of companies recognize the value of promoting and contributing to open source projects while simultaneously building service-based business models around them. Relying solely on proprietary software is becoming an outdated approach, and most companies that fail to adapt and embrace this new paradigm risk being left behind in today's competitive market.

The open source software ecosystem, while diverse and vibrant, also faces significant challenges, particularly in terms of free-riding on a large scale. From big tech companies to individual developers, a wide range of contributors provide open source software. However, a substantial portion of the beneficiaries, especially large corporations, reap the benefits of open source without giving back to the community. This issue is exemplified by the countless stories of solo software maintainers who develop and maintain critical software libraries that are essential to thousands or even millions of applications. Despite their crucial role, these developers often receive little to no support for their efforts. As a result, some developers become frustrated and abandon their projects altogether. In response to this problem, some countries, like Germany, are taking steps to support open source initiatives through programs such as the sovereign tech fund, which aims to invest in and sustain critical open source projects.

The Role of Governments in Driving Change for Open Source Software

Governments hold the key to driving change in the software landscape through their substantial spending on software procurement. It is estimated that government worldwide spend about 13 trillion USD per year. By adopting the principle of "public money, public code," governments can ensure that any public funds invested in software development result in open source solutions that benefit society as a whole. If governments were to allocate significant resources to projects like developing an open source alternative to Microsoft Office, it would not only provide access to high-quality software for all but also foster a more collaborative and innovative ecosystem. However, the challenge lies in the fact that procurement processes often favor requesting specific technologies rather than seeking solutions to problems. To effect meaningful change, governments must rethink their approach to procurement and prioritize open source solutions that promote the public good.

The Myth of Vendor-Neutral and Technology-Neutral Solutions

It is a mistake to call for vendor-neutral or technology-neutral solutions in public procurement, as is often done. Proprietary software vendors have a strong incentive to lock users into their software, which distracts from the fact that software is never perfect, never finished, and requires ongoing adjustments to accommodate users, processes, and other demands. The more important question is how to develop and maintain a software product over time and who can provide the necessary support. Opting for a proprietary software solution often leads to high license costs and vendor lock-in. The development of digital public infrastructure solutions will hopefully change this by providing robust, secure, and scalable open-source options that can compete with proprietary offerings.

The question that arises is, what problems does software actually need to solve? There is a myth that software development must address a wide range of complex issues. While edge cases certainly exist, a significant portion of current software development focuses on modernizing legacy systems. Websites, apps, and particularly business software are becoming increasingly standardized. For example, customer relationship management systems share similar needs across companies, and mobile apps often incorporate many standard features. Upon examining the underlying logic of this software, it becomes evident that it is becoming more standardized in an open source manner.

There is a false illusion that more IT innovation is necessary to solve significant problems. In reality, with the wealth of software technology already available, digital government and meaningful social innovation are within reach. Rather than focusing on hyped technologies such as blockchain or artificial intelligence, the emphasis should be on leveraging the global community of collaborating developers to utilize existing technologies in support of real-world challenges.