Oracle's fiduciary duty to stop the open-source movement

Oracle's fiduciary duty to stop the open-source movement

Summary: Defending against Oracle's attempt to wipe out large open-source communities will be difficult.

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TOPICS: Oracle
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Oracle's attempt to buy MySQL, and its acquisition of open-source database company Sleepycat, and its reported interest in JBoss, demonstrate an extremely aggressive attack on the open-source movement.

The software giant could stop much of the open-software movement dead in its tracks  through acquisitions, and stifle the rest of it by making it difficult to recruit a developer community.

Who wants to do free development work for Oracle--if it turns out that Oracle could very well acquire the open-source company in the future?

Oracle could do all of this with the pocket change from one of Larry Ellison's sofas. It would not take very much money at all.

And Oracle's management has a fiduciary duty to maximize profits and value for its shareholders. Buying open-source companies provides an incredible return on investment and makes it possible for Oracle to boost revenues and profits.

An acquisition of MySQL, for example, would provide Oracle with an incredible return on its investment in just a matter of months because it would stop the loss of tens of millions of dollars in lost new business.

Enterprises aren't going to rip out their Oracle databases and applications but in new projects, they are increasingly comfortable installing open-source equivalent products. And that means millions of dollars in the loss of new business for Oracle, not to mention the steady maintenance income on those expensive licenses.

Dan Kusnetzky, the former IDC analyst and now head of marketing strategy at Open-Xchange--the open-source email server company, confirms that the vast majority of his company's deals are for new IT projects.

"Our product works exactly like Microsoft Exchange so it's very easy to implement, and the users don't notice any difference at all," Mr Kusnetzky says. "I would never advise anybody to walk away from technology that works, but in new projects, you can save a lot of money using open-source software plus you have a very large support community."

But open-source users are also motivated by frustration.  "There are many open-source software users who became irritated by their software vendors and wanted an alternative."Mr Kusnetzky says.

What happens now if those frustrated users, some possibly frustrated with Oracle, now have to deal with Oracle again, because of an acquisition? "That's certainly what happened to some of the J.D. Edwards customers," he notes.

[I wonder if those disloyal customers will be getting any special discounts from Oracle? I doubt it, there's probably a list somewhere...]

Oracle's acquisition spree will be difficult to stop because of the compelling economics of such deals. An acquisition of an open source company would cost just several tens of millions of dollars or about the same as losing a half-a-dozen-or-so new business deals. It's a no-brainer.

Even if Oracle has honorable intentions in its bid to accumulate open-source companies, I can't imagine that the open-source communities would be motivated to act as unpaid developers for Oracle. Where is the glory in that? They would shut down in a heartbeat.

I think that the only thing that can save the open-source movement is IBM. And IBM had better figure out its strategy fast.

I think this calls for a bat signal--or rather an Irving Wladawsky-Berger signal to be shone into the night sky over Silicon Valley.

Maybe it will be seen from the very stylish pyramids of IBM's ( I.M Pei designed) Armonk, NY  corporate compound and Mr Wladawsky-Berger, IBM's top strategist and champion of open-source and open industry standards, will come up with a strategy to stop Oracle.

And there is also SAP, which has a vested interest in open-source and has a stake in MySQL. SAP is hoping the open-source movement will be able to slow Oracle's expansion and make it less competitive. That's precisely why SAP Ventures invested in MySQL. And that is why Jeff Nolan, the former VC at SAP Ventures is heading a "kill Oracle" team within SAP, and open-source is one of the weapons of choice.

I am also proposing an alternate defense: Establish open-source companies with a structure similar to that of the Grameen Bank, in which the customers are also shareholders in the company. And maybe the open-source development community also become shareholders--after all, they put sweat and tears into developing the software.

The Grameen model could very well be a much more effective defense of the open source movement against aggressors than hoping for a white knight to appear from the East.

Topic: Oracle

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  • Sounds too good to be true

    [i]An acquisition of MySQL, for example, would provide Oracle with an incredible return on its investment in just a matter of months because it would stop the loss of tens of millions of dollars in lost new business.[/i]

    I wonder why Microsoft didn't think of that?

    As the saying goes, "WHen something sounds too good to be true, it probably isn't."

    Your assumption is that buying MySQL, the company, would allow Oracle to shut down MySQL, the [i]software libre[/i]. Alas, that's not how it works. Since the MySQL code is out and licensed beyond the ability of Oracle to recall, there's nothing that they can do to prevent others from continuing to use it.

    At most, Oracle could refuse to contribute new work to the open project. Unfortunately, MySQL-the-company isn't making all of those and any withdrawal would just result in a code fork -- with the new code [u]not[/u] being dual-licensable.
    Yagotta B. Kidding
    • Sublime Port

      Yes, having a weak competitor can be advantageous. The competitor controls the open source advocates without being a danger to the more powerful companies.

      Look at the latter history of the Ottoman Empire, and how many places England and France ended up having to administer when it fell.

      That's also why Microsoft probably appreciates Linux. Does no harm to them, and prevents a competitor from growing. Microsoft has been thinking about the usefulness of open source.

      In fact, they probably see every application that creates a version for Linux rather than a significant alternative as a sublime port.
      Anton Philidor
      • Hmmm...

        As far as the Ottoman empire goes, I don't think Britain or France "had" to do anything. I'm not sure why you think they "had" to do anything either.

        Ok now, what competitor are you talking about being prevented from growing?

        Erm, since when has Microsoft appreciated Linux?

        And how can they think that every application being ported to Linux is a "sublime port"?
        zkiwi
      • Good point with one problem

        Anton, I agreed with everything you said with one exception, your choice of "weak" to describe Microsoft's open source competition. As we observe the growth of the movement, and it is undeniably growing, how can it be described as weak? Nevertheless, Microsoft can benefit from having a STRONG competitor in open source. They may lose some business. They may even fail to compete in certain market segments. This merely forces them to adapt and to distinguish their role from those served by the open source "competition". Nature provides a good analogy. Monoculture is not a desirable thing. Furthermore, Microsoft has some advantage in that they can choose to evolve... and how.

        I think you make a good point in suggesting that Linux prevents other (would be) competitors from growing.
        zdnetaaa24
  • I'm not sure

    That you understand open source.

    mySQL, JBoss etc are "in the wild" OSS. Even if Oracle bought them, and tried to "close them down", the OSS community would just build a fork, as they are entitled to do and life would go on.

    Why they would want to buy this stuff? It's probably a technology and money issue. It's probably cheaper to buy the rights (and some developers) who know about the tech they are interested in than to do it themselves.

    Conclusion, I think your consipracy theory is at best far fetched. If it was that easy to close OSS down then SCO would have done it already :P
    zkiwi
  • Ah, the mindset of the free-market capitalist...

    I thought the best product was supposed to win...

    Not the thug with the biggest dollar.
    HypnoToad
    • RE: Ah, the mindset of the free-market capitalist...

      Yeah, just like Sony's Betamax format... didn't.

      C 'est la vie.
      Deleted2006
  • open source etc....

    As I understand it, if the product is currently open source and under the GPL, then literally anybody can take the current version and start a new branch of development. If Oracle buys it from the current developers, they can certainly copyright any new version, but what was GPL'd is still GPL'd, including all of the Code that was included in any GPL'd version. Once something is released under the GPL, as far as I know you can't "un-ring the bell".
    jlewisfl
    • You got it right

      Oracle is trying to buy up companies whose products can't be bought off. Once a fork is made, a new company could pop up supporting and/or developing the forked version, and Oracle will wind up back at square one, with a new competitor.

      Larry Ellison apparently doesn't understand the true value of a GPLed product, otherwise he'll be saving a lot of money and grief in the long run.
      Tony Agudo
    • Not that simple

      The competition mounted by the open source companies lies mainly around the GPL'd code. The scheduled releases, support frameworks, matrix of supported configurations - all the goodies of commercial software development built around the open source code, these are the things that make enterprise actually pay any money instead of grabbing the code and rolling their own.
      It would be possible for other companies to pick up the glove after MySQL/JBoss/PHP are gone up in the smoke, but surely not so fast.
      hgheist
  • Nah, they'd just fork

    They'd squealch the proprietary / enterprise side of things pretty quickly, sure, but trying to squealch the open source side is a bit more difficult.

    Remember, in most open source licenses it's perfectly acceptable to create a new fork of the code and continue development. And that's exactly what would happen: The open source side would just fork and continue despite Oracle's attempts to squealch it.
    CobraA1
    • Realistic

      This is the more realistic picture, Oracle can buy out the companies, but they cannot buy out or monopolize the code. The article writer does not seem to understand the Open Source concept.

      Any other company such as IBM, Novell etc. can take up the code and incorporate it in their own Open Source version of the product.
      bigpicture
    • Psychological effect...

      Yes, they could all "fork" off to continue to create an open-source version but there would be a psychological dampener on the community. Because the enterprise services arm would be, or could be, owned by one of the big players.
      foremski
  • Business Plan

    1) Write Open Source app
    2) Sell support, and grow enough to threaten a big company
    3) Get bought out by big company
    4) Profit

    Oops... wrong website for this post.
    Knorthern Knight
    • RE:Business Plan

      LOL too true!

      Actually that was the general business plan during the .com boom. Make a product that got enough consumer attention and use, then PRAY that some larger, better funded company would buy you out, this giving all the employees with (worthless) stock options a great deal of money.

      I agree with the OSS argument, one I totaly forgot about while reading this article (damned anti-OSS writers). Being open source, another company/programmer will just recompile and continue on.

      I do hope MySQL is not bought out, however. Granted their sourcce will live on, but I use MySQL on my Clark Connect Linux Server. It's dead simple to use and it's fast!

      I've worked with Oracle, and I always, ALWAYS know when I'm working on a Oracle data base, it's slow and picky (case sensitive).

      I often wonder how they got to be so big with such a slow DB system...
      Airwolph
    • RE: Business Plan

      Knorthern Knight said:

      1) Write Open Source app
      2) Sell support, and grow enough to threaten a big company
      3) Get bought out by big company
      4) Profit

      ------

      Actually, this factor notwithstanding, it could still be beneficial
      to the community because of the high turnover of new software,
      all of which would still be GPL'd, therefore forkable.
      Deleted2006
  • Code is FREE as in FREEDOM

    Code which is released as OPEN SOURCE is like a can of worms, you cannot make it proprietary overnight and pretend the old open source license no longer applies. If a company released something as open source, it's OPEN, free, as in freedom.

    Yes, they can switch licenses, increase prices, etc. for FUTURE versions, but a community of volunteers would form and continue evolving the previous (open) version!.

    IMHO, you really don't seem to have much of a clue about what open source is all about. It happened to Nessus already, it happened to the Mambo CMS whose developers left over licensing disagreements and created Joomla.

    Nessus forks
    http://www.theinquirer.net/?article=26856

    "BRITISH security boffins have decided to start to build their own fork to the Nessus vulnerability scanner. Nessus was released under the GPL, but last week the founder of the project Renaud Deraison announced that he was changing the licence for the next version."
    fernando.cassia9
    • This IS a little different.

      The fact that MySQL has GPL'd connect libs, which force you to GPL your own code written to interact with it (if it uses the mysql connect libs, which most things do).

      Note that no matter how many people volunteer to work on the GPL fork, the product will be a database you can ONLY use with GPL software. Imagine only being able to run GPL software on a linux machine. That's kind of what this means to MySQL from a database app perspective.
      Sxooter_z
  • Doesn't matter

    Oracle or whoever can buy up and spend their money as they see fit. Any code that was released under the GPL is still GPL'ed and will remain that way. If anything it would just create a fork in the project and the GPL version would end up on top anyway. I am sure other posters here have pointed out similar situations with Nessus.
    Rjakiel
    • But it does matter...

      To the companies that bought commercial licenses, it does matter. They bought this product in good faith, and built infrastructure on it, assuming they could then do whatever they wanted to with their code and they wouldn't have to deal with the GPL, for things like redistributing their own code.

      But, if the GPL version is the only version, they're kinda stuck, cause the connection libs are full GPL, not LGPL, and therefore anything you link against those libs to connect to MySQL gets GPL'd as well. Unless you've got the commercial license saying you're clear.
      Sxooter_z