Open source = cheap input?

Nicholas Carr, commenting on Larry Ellison’s raid on Red Hat

It’s always been clear that the [Open Source production] system, however you view it, imposes an economic vulnerability on the profit-making companies that engage in it. Those companies have to pay labor costs for developing a free good, a public good that that they have no proprietary control over. Their rivals can reap the fruits of that labor without having to pay for it. That creates, in theory, a dangerous asymmetry in competition.

But what hasn’t been clear is whether that vulnerability actually matters, whether the danger that exists in theory also exists in reality. Are there economic or other barriers that prevent competitors from capitalizing on the investments of the open-source companies?

We’re about to get a lot closer to an answer to that question, thanks to that great clarifying force in the technology business, Larry Ellison. Yesterday, Ellison announced that his company, Oracle, fully intends to eat the fruits of the labor of Red Hat, the leading for-profit supplier of the open-source Linux operating system. Oracle is taking the version of Linux developed by Red Hat and distributing it under its own brand, as “Unbreakable Linux.” And, in a stab at Red Hat’s very heart, Ellison claims that Oracle will substantially undercut the open-source firm’s prices for supporting the software.

It seems like a claim that shouldn’t be hard to fulfill. After all, Oracle doesn’t have to pay those labor costs.

Once open source became a business, rather than a movement, the rules changed. Larry Ellison, whos’s nothing if not a non-sentimentalist, understands that, and he doesn’t particularly care what “the community” thinks. His attack on Red Hat would never be called neighborly, but it is, as Business Week’s Steve Hamm puts it, “a ruthless and brilliant act of capitalism.”

It’s also something more. It illuminates a much broader and deeper tension in the digital world, a fault line that runs not only through the software industry but through every industry whose products or services exist, or can exist, as software. The tension is between social production and the profit motive. Volunteer labor means something very different in the context of a community than it does in the context of a business. In the context of a community, it’s an expression of fellowship, of the communal value of sharing. But in the context of a business, as Ellison’s move illustrates, it’s nothing more than a cheap input. Many of the most eloquent advocates of social production would prefer it if this tension didn’t exist. But it does, and it’s important.

This one will run and run. Carr is unduly impressed by the Ellison ploy, I think. There are subtle penalties for bad behaviour which the Oracle boss, being a corporate bully, is unlikely to understand. It’s worth remembering that when IBM, itself no slouch at the deployment of brute corporate force, decided that it would put Open Source products at the heart of its own offerings, it explicitly decided that good behaviour would be key to success. And IBM has, by and large, been a good neighbour in the Open Source community. It has also prospered mightily from it.