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| DATE | 2019-04-28 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout - NYLXS] amazon opensource wars
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https://onezero.medium.com/open-source-betrayed-industry-leaders-accuse-amazon-of-playing-a-rigged-game-with-aws-67177bc748b7
Amazon Has Gone From Neutral Platform to Cutthroat Competitor, Say Open
Source Developers
Community leaders say AWS increasingly poses an existential threat
Go to the profile of Andrew Leonard
Andrew Leonard
Apr 24
On March 11, a Vice President at Amazon Web Services, Amazon’s cloud
computing behemoth, published a blog post announcing the release of its
own version of Elasticsearch, a powerful open-source software search
engine tool.
Elastic is a public company founded in 2012 that is currently worth over
$5 billion; the vast majority of its revenue is generated by selling
subscription access to Elastic’s search capabilities via the cloud. It’s
based in Amsterdam and employs more than 1,200 people.
In the blog post, Adrian Cockcroft, VP of cloud architecture strategy at
Amazon Web Services (AWS), explained that the company felt forced to
take action because Elastic was “changing the rules” on how its software
code could be shared. Those changes, made in the run-up to Elastic’s
2018 IPO, started mixing intellectual property into Elastic’s overall
line of software products.
Open-source software is defined as code that can be freely shared and
modified by anyone. But now Elastic was telling customers that certain
elements in its product mix could not be accessed without payment and
that the code could not be freely shared.
Elastic did not explain its strategic shift at the time. But industry
observers interpreted the changes as a response to increasing
competition from AWS, which had incorporated Elasticsearch’s code and
search functionality into its own suite of computing services.
Elastic isn’t the only open source cloud tool company currently looking
over its shoulder at AWS. In 2018 alone, at least eight firms have made
similar “rule changes” designed to ward off what they see as unfair
competition from a company intent on cannibalizing their services.
In his blog post, Cockcroft argued that by making part of its product
suite proprietary, Elastic was betraying the core principles of the open
source community. “Customers must be able to trust that open source
projects stay open,” Cockcroft wrote. “When important open source
projects that AWS and our customers depend on begin restricting access,
changing licensing terms, or intermingling open source and proprietary
software, we will invest to sustain the open source project and community.”
AWS’s announcement did not attract the immediate attention of the
Democratic presidential candidates or the growing cadre of antitrust
activists who have recently set their sights on Amazon. But in the world
of open source and free software, where picayune changes in arcane
language can spark the internet equivalent of the Hundred Years War, the
release of AWS’s Open Distro for Elasticsearch launched a heated debate.
Open source software has been one of the biggest success stories of the
software industry. In 2018 alone, Microsoft’s purchase of the open
source software development platform GitHub for $7.5 billion,
Salesforce’s purchase of the open source company Mulesoft for $6.5
billion, and IBM’s blockbuster $34 billion purchase of the Linux vendor
Red Hat proved that open source is a crucial part of the larger software
industry. And there is growing acceptance that the collaborative model
of developing open source software is a winning strategy to meet the
tech industry’s need for constant innovation. So, when the likes of
Amazon start accusing companies of not playing fair, people notice.
AWS is striking at the Achilles’ heel of open source: lifting the
work of others, and renting access to it.
Sharone Zitzman, a respected commentator on open source software and the
head of developer relations at AppsFlyer, an app development company,
called Amazon’s move a “hostile takeover” of Elastic’s business. Steven
O’Grady, co-founder of the software industry analyst firm RedMonk, cited
it as an example of the “existential threat” that open source companies
like Elastic believe a handful of cloud computing giants could pose.
Shay Banon, founder and CEO of Elastic, carefully defended Elastic’s new
licensing practices, while at the same time making his unhappiness with
Amazon crystal clear.
Elastic’s products, Banon wrote, have been “redistributed and rebundled
so many times I lost count… There was always a ‘reason’, at times masked
with fake altruism or benevolence. None of these have lasted. [Amazon
and other vendors] were built to serve their own needs, drive confusion,
and splinter the community.”
(AWS declined to comment on the record for this story, and open source
companies on the front lines of the confrontation refused to speak in
detail about their relationship with Amazon, either providing generic
statements or declining interviews.)
The reaction to Amazon’s move wasn’t all negative. Some veterans of the
open source community praised Amazon’s defense of open source values,
while pointing out the fundamentally messy contradictions of Elastic
mixing commercial priorities with open source principles. And
fundamentally, adopting open source code is entirely legal.
But the notion that Amazon was presenting itself as an altruistic
defender of the digital public commons rankled community veterans like
Zitzman, who says that Amazon has a poor reputation for working with the
community. (GitHub data shows that Amazon has far fewer employees than
Microsoft, Google, or IBM contributing code to open source projects.)
These critics see Amazon’s decision to recreate Elasticsearch as
opportunistic . behavior. Amazon, they say, is leveraging its dominant
power in cloud computing in order to unfairly reap intellectual
property. In doing so, AWS is striking at the Achilles’ heel of open
source: lifting the work of others, and renting access to it.
What happened to Elastic, Zitzman says, fits into a “long-standing trend
of AWS rolling out managed services of popular open source technology,
or replicating such technologies… This move is a text-book
commoditization move — providing Elastic’s premium services for free.”
Or as Salil Deshpande, a managing director at Bain Capital Ventures and
an investor in multiple open source companies, puts it: “It is clear
that AWS is using its market power to be anti-competitive.”
On the campaign trail, Senator Elizabeth Warren recently called for the
breakup of Amazon, declaring that “you can be an umpire, or you can own
a team, but you can’t do both at the same time.” She was referring to
Amazon’s role as both an e-commerce platform and a vendor — a scheme
that lets the company observe market trends and undercut sellers with
in-house products at opportune moments. But Warren’s words might also
describe Amazon’s behavior in the open source economy.
If Amazon uses the same ostensibly anticompetitive tactics in the cloud
that have helped it establish a commanding position in e-commerce,
regulators might want to start paying closer attention. A single company
enjoying a dominant position in the cloud could, some critics suggest,
result in less overall innovation in the most important part of our
digital infrastructure. And that means that the future of antitrust may
be up in the cloud.
“What’s happening to open source providers illustrates the raw power
that Amazon has,” says Stacy Mitchell, a longtime critic of Amazon and
co-director of the Institute for Local Self-Reliance, a nonprofit
organization that specializes in challenging “concentrated economic and
political power.”
“Amazon’s control of the core infrastructure for exchanging goods and
data means they have the ability to set the rules for how everyone else
operates,” Mitchell says. “We should recognize that as a kind of
governing power.”
AWS is the undisputed goliath of cloud computing, controlling somewhere
around 32% of the total worldwide market, or as much as the next three
biggest providers combined. When a configuration error knocked large
swathes of AWS offline for four hours in February 2017, much of the
internet stumbled: Slack, Venmo, BuzzFeed, and even Apple’s iCloud all
experienced difficulties.
The list of prominent companies that rely on AWS includes Spotify,
Netflix, Airbnb, Comcast, Lyft, Uber, Adobe, and NASA. Big chunks of the
U.S. government depend on AWS. Medium, the publisher of this story, uses
AWS too. Each of these organizations is taking advantage of the same
irresistible value proposition: Off-loading computing operations to the
cloud saves money and frees companies to focus their attention elsewhere.
In fact, it might be more revealing to list the companies that don’t use
AWS: Walmart, Target, Gap, and Kroger — vendors that are all acutely
familiar with Amazon’s cutthroat retail tactics. All of them eschew AWS,
Sharone Zitzman says, precisely because “they can’t trust [Amazon] with
their intellectual property and business insights.” Walmart goes so far
as to require that any technology firms they partner with also eschew
using AWS.
Last November, Microsoft’s corporate vice president for global retail
and consumer goods told CNBC that retailers “want to own their own data,
and they want a partner that is not going to be a competitor of theirs
in any other part of their businesses.”
The revenue numbers generated by AWS are eye-popping. In the fourth
quarter of 2018, AWS accounted for $7.4 billion — or 10% — of Amazon’s
revenue, with that number growing a rate of 45% per year. That same
quarter, AWS represented 58% of Amazon’s “operating income” — a key
measure of profit. By comparison, in 2018, Amazon’s fourth-quarter
product sales revenue grew at an annual rate of 8.2%. AWS is
increasingly the engine that makes Amazon go.
But “the backbone of the internet” is far more than just a bunch of
massive data centers where companies store their information. AWS is
both infrastructure and services, meaning that in addition to its low
prices, AWS offers a constantly expanding palette of computing
essentials, including data processing, analytics, search, security, and
integration with multiple programming languages.
The surging growth of cloud services over the past decade has led to a
proliferation of companies that sell tools and services that can be
integrated easily with AWS, Microsoft’s Azure cloud offering, or Google
Cloud. That includes Elastic, but also database firms MongoDB and Redis
and the real-time data management company Confluent — all open source
software companies operating under a cloud subscription business model
referred to in the software industry as SaaS, or “software as a service.”
“Companies have gone from regarding cloud providers like Amazon,
Google or Microsoft as not even worth mentioning as competition to
dreadful, existential threat.”
One of the most striking developments in the evolution of the software
industry over the past 20 years has been the emergence of open source
companies like Elastic and MongoDB, which have monetized their
investment in freely shareable code while harnessing the labor of a
large community of programmers. The SaaS subscription model is key to
this success story. Customers eagerly outsource the constant labor of
updating their software, while open source companies are committed to
continually innovating and improving their product. What seemed
revolutionary and vaguely anti-capitalist in the late 1990s is now a
well-established and thriving business model.
But critics say AWS is endangering that balance by effectively
strip-mining the popular open source tools created by others and
integrating them into its own cloud product suite. Though some existing
licenses mean that that type of behavior is legal, it also makes it much
more difficult for companies like Elastic to convince customers to
continue paying.
In addition, critics argue that the company’s role as a platform gives
it an unfair advantage. Because AWS has thousands of customers, the
company has a godlike perspective of broad industry trends, including
insight into which third-party tools are most popular. The suspicion,
one executive of an open source cloud tool company told me off the
record, is that AWS is watching “run rates” — the amount of money spent
on a particular tool per year. When they see a service provider like
Elastic start to generate serious revenue, Amazon incorporates the
functionality of that tool into its own proprietary service. In the
words of Warren, that makes AWS both a team owner and an umpire.
Developers like Elastic are starting to take note. “In the last twelve
to eighteen months, in fact, a switch has been flipped,” wrote RedMonk
analyst Stephen O’Grady in a recent post. “Companies have gone from
regarding cloud providers like Amazon, Google or Microsoft as not even
worth mentioning as competition to dreadful, existential threat. The
fear of these cloud providers has become so overpowering, in fact, that
commercial open source vendors have chosen — against counsel, in many
cases — to walk down strategic paths that violate open source cultural
norms, trigger massive and sustained negative PR and jeopardize
relationships with developers, partners and customers.”
Critics like O’Grady argue that Elastic’s recent changes were spurred by
a concern of being overshadowed by AWS. Far from defending the
principles of open source, critics feel AWS is building its own business
by incorporating whatever data management tools turn out to be popular
and useful into its own service offering. O’Grady says Elastic isn’t the
only open source cloud tool company to shift toward more restrictive
licensing agreements over the past year. MongoDB, Redis Labs, and
Confluent, among others, have all done the same.
The license changes have caused massive controversy in the open source
world, where anything that smacks of proprietary control tends to be
treated as apostasy. None of the companies would directly comment on why
they made the changes, but there is a common theme that links them all
together: An explicit attempt to prevent cloud computing providers, with
a special focus on AWS, from taking code that someone else created and
delivering it as a service on a cloud platform. The license changes
thread a very narrow needle: They aim to maintain the perception that
the underlying code is still free to share and modify by the greater
community, while preventing specific cloud platforms from taking the
functionality represented by that code and offering it as a subscription
service.
In other words, open source advocates argue, there’s no problem at all
if AWS engineers want to contribute code improvements to their tools,
but there absolutely is a problem if AWS wants to start selling its own
version of those tools.
Late last summer, Redis, maker of a popular database management tool,
changed its licensing terms to prevent AWS from offering Redis
functions. For Redis, AWS had become an existential threat. GeekWire’s
Tom Krazit wrote last November that “as more and more companies embrace
cloud computing and ‘lift and shift’ their existing applications and
infrastructure to providers like AWS, it makes a lot of sense [for
customers] to use the AWS Redis service… [rather than] a service offered
by Redis through the AWS Marketplace.”
The key difference? When someone subscribes to the original Redis via
the AWS cloud, Redis gets the fees. When someone uses AWS’s own “Redis
service,” AWS gets the money. “This is a problem not just for us but for
almost any successful open source project to date,” Ofer Bengal, CEO of
Redis, told GeekWire.
Two months later, MongoDB, another extremely successful open source
database company, announced its own licensing change. CEO Dev Ittycheria
explained that “[w]henever a new open-source project becomes popular,
cloud providers strip mine the technology, put the freeware on their
platform, capture most if not all of the value but give little back to
the community.” (AWS followed up by releasing its own “managed services”
version of MongoDB, called DocumentDB, in January 2019.)
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