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2025-02-05
In recent years, several high-profile companies in the tech world—such as Redis, Elastic, MongoDB, and HashiCorp—have shifted away from their open-source foundations and adopted proprietary models. The shift, driven by the need for greater monetization and growing pressure from cloud providers and investors, has been promoted as a strategic move for long-term growth. However, data and real-world examples have increasingly shown that abandoning open-source principles does not lead to the financial success these companies hoped for. In fact, it often backfires, resulting in stagnating growth, disillusioned users, and thriving open-source forks.
Dawn Foster, director of data science at the CHAOSS Project, presented compelling evidence at the UK’s State of Open conference, showing that community-driven forks of proprietary codebases are not only surviving but thriving. Forks like OpenSearch, Valkey, and OpenTofu have gained momentum by offering open alternatives to the proprietary models of companies like Elastic, Redis, and HashiCorp. These forks are supported by diverse contributions from companies and developers across the globe, providing a significant advantage over the more centralized, vendor-dominated models of proprietary software.
What Undercode Says: Analyzing the Impact of Proprietary Shifts on Open Source
The trend of major companies transitioning from open-source to proprietary models has been widely discussed in the tech industry. On the surface, it seems logical: open-source software is often free, and shifting to a paid model could provide more sustainable revenue streams. However, the reality is far more complex.
One of the key reasons why switching from open-source to proprietary software often fails to deliver on its promises is the unexpected resilience and strength of the open-source community. As demonstrated at the State of Open conference, the shift to proprietary licenses like the Server Side Public License (SSPL) or the Business Source License (BSL) may temporarily increase revenue, but it doesn’t result in sustained growth or increased company value. RedMonk’s Rachel Stevens and James Governor noted that companies like Elastic and Redis did not see the “hockey stick” growth that they expected from their licensing changes. In fact, they observed no significant increases in share prices or revenue growth following the switch.
Meanwhile, the rise of forks is a direct challenge to the proprietary model. Open-source forks—community-driven alternatives to proprietary software—are flourishing. For example, OpenSearch, which was forked from Elasticsearch after Elastic’s 2021 license change, now boasts contributions from over 400 developers from various organizations, including AWS and Aiven. Similarly, Valkey, a fork of Redis, gained significant traction almost overnight, backed by prominent companies such as AWS, Google, and Alibaba. HashiCorp’s Terraform fork, OpenTofu, became a project under the Linux Foundation, attracting over 120 contributors in just a few months.
These forks thrive because they are rooted in a community-focused approach, often governed by neutral foundations that ensure no single entity has total control over the roadmap. This approach contrasts sharply with proprietary models, which tend to be driven by the interests of a single company. The result is that users flock to these forks, eager to avoid vendor lock-in and the limitations imposed by proprietary licenses. As Peter Zaitsev, co-founder of Percona, pointed out, 75% of Redis users considered switching to Valkey after Redis’s 2024 license change.
Moreover, open-source forks tend to innovate at a faster pace. Take the case of Grafana, a fork of Kibana. Grafana rapidly evolved into a $6 billion company by adding features like metrics support, which Kibana’s parent company, Elastic, had initially rejected. While Elastic remains successful in its own right, this decision to overlook user needs cost the company billions.
The data from CHAOSS further underscores the superiority of forks over proprietary alternatives. Forks under neutral foundations—such as OpenSearch and OpenTofu—are far more diverse in terms of organizational contributions than proprietary models. OpenSearch, for instance, attracted contributions from 45 different organizations in its first year, while Elasticsearch was dominated by a single vendor. This diversity fosters greater innovation and more rapid development, making the forks more resilient and adaptable to market changes.
The strength of open-source forks is not just about the developers involved; it’s about the community. Stephen Walli from Microsoft highlighted the crucial role of community in the success of these projects. Unlike proprietary software, which treats projects as products, open-source software thrives when it is seen as a collaborative effort, a project that belongs to everyone. The governance models of forks like OpenTofu ensure that no single organization controls the direction of the project, giving developers more freedom to innovate and shape the software according to the needs of the community.
The financial implications of this shift are clear: businesses that abandon open-source principles and try to monetize their code with proprietary licenses risk alienating their user base, stifling innovation, and losing out to more agile, community-driven alternatives. For investors, this presents a cautionary tale: betting against open source is a risky proposition. The growing success of forks indicates that the future of software development is rooted in collaboration, not control. As the market continues to favor open-source solutions, companies that understand this shift and embrace the power of the community will be the ones that thrive.
References:
Reported By: https://www.zdnet.com/article/dumping-open-source-for-proprietary-rarely-pays-off-better-to-stick-a-fork-in-it/
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