Software liability law could divide open source

Software liability law could divide open source

Summary: European Commission-proposed software protection law may benefit open source vendors, but push smaller independent developers into a corner.

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The world of open source development could be divided if the European Commission (EC) succeeds in passing a law extending consumer protection rules to software, according to experts.

The EC proposes software companies be held liable in the European Union (EU) for the security and efficacy of their products.

David Mitchell, senior vice president of IT Research at Ovum, thinks this may lead to a situation boosting current open source vendors' business models, but making it more difficult for independent developers to thrive.

The EC proposal is likely to make vendors force customers into support and maintenance agreements upon each purchase, in order to help the former fulfill warranty obligations, said Mitchell.

This is already in line with the business models of current open source vendors such as Red Hat and Canonical, which sell support services. On the other hand, the "garage open source model" of independent developers who do not have the scale to guarantee their products at that level, will likely suffer, Mitchell said in an interview with ZDNet Asia.

Bryan Tan, director at Keystone Law Corporation, had predicted in an earlier blog post the "caving in" of open source software due to similar worries over liability on the parts of independent developers.

"Gone are the days where software could be written in a garage by two guys," Tan wrote.

Tan also told ZDNet Asia the proposed law would likely inflate prices for consumers outside the EU, as well--including the Asia-Pacific region, as a result of the vendors' need to provide insurance. Furthermore, the "death" of some smaller vendors would lead to increased prices as well from lack of competition, he added.

While the EC has said the proposal is in the interest of consumers, Ovum's Mitchell thinks there will be a "huge amount of market uncertainty" created, on the other hand.

"Customers will find that their existing support and maintenance agreements are now ambiguous, or in contradiction with any new legislation," he said. Businesses would also have to undertake longer testing cycles, resulting in project delays, Mitchell added.

Realistically, liability will be hard to pinpoint, because of the inter-dependency between hardware and software, Mitchell noted. The failure of a piece of software could be blamed on another installed software or hardware portion.

"[The legislation] promises to be a lawyer's dream [come true] but not to deliver any tangible benefit for the customers," he said.

However, Stanley Lai, partner at Allen & Gledhill, thinks consumers will benefit. While he agrees that software prices will likely go up, "it remains to be seen whether consumers will consider that the price to be paid in return for quality assurance is an adverse effect".

Lai also said it is "premature and over-simplistic" to predict the demise of open source software. He said with code open and more easily-corrected--the oft-quoted "many eyeballs" effect--users and consumers of open source software may be more likely to get errors fixed through the community and less likely to pursue direct recourse to liability under the proposed legislation.

Topics: IT Employment, Legal, Open Source, Software, Software Development, SMBs

Victoria Ho

About Victoria Ho

Victoria Ho is a tech journalist based in Singapore, whose writing has appeared in publications such as ZDNet, TechCrunch, and The Business Times. When she's not obsessing about IT, you can find her tinkering with music and daydreaming about which guitar to buy next.

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  • Software liability law could divide open source

    The real question is what would this to companies like Microsoft, htat have the $5 dollar liablity clause in the EULA ? given the regular security issue with windows this could be a disaster. Every time a computer gets infected MS would be liable.
    anonymous
  • Software liability law could divide open source

    The EUSSR is acting like the former Soviet Union. Consumers and producers are subject to existing laws and these are adequate already. The problem stems from the riduculous self exempting of responsibility license agreemsnts of people like MS. If this were a significant problem, then large oranizations would have forced MS to provide guarantees. Alternatively better more responsible software companies would have come into existence. Neither have happened so I conclude the consumer producer relationship is in status quo. In which case the EUSSR does not need to stick its nose in where it is not wanted.

    We do not need everything from sexuality to software regulated by clueless EUSSR bureaucrats.
    anonymous
  • Software liability law could divide open source

    This article strikes me as a bit silly. It singles out open source for
    no apparent reason. Yes, the proposed law would be bad for
    one-guy-in-a-garage commercial open source operations, but how would it be any better for one-guy-in-a-garage commercial _closed_ source operations? What does the license of the code have to do with anything? Seems to me the only important thing here is the size of the company.

    On balance, it may be better for open source than for closed source,
    because far fewer of the open source garage operations are actually
    charging for the software they produce. A lot - maybe even the majority
    - of closed source garage operations produce pay-for software, but this
    isn't the case in open source, and by my understanding, the proposed law applies only to _paid_ software.
    eileen.yu