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When speaking to my friends about FOSS, a common concern comes up that if they release their code under a free and open source license, this might encourage companies to 'steal' their hard work without giving them compensation. Obviously if the code was released under a free and open license it wouldn't be stealing but the sentiment remains.

My question is:

Are there cases where individual contractors or small companies (1-5 employees, say) have released their source code under a free and open license and had a bigger company under cut them, take customers or profit away from them or drive them out of business?

Ultimately I think there are stronger arguments to make source code free and open than "bigger companies won't take business away from you" (i.e. "that doesn't happen") but I'm curious if there are any real world cases where making software free and open have significantly hurt a small software shop.

  • Since you write "steal their hard work" about a FOSS, I feel that you are assuming the special case where the company retains the copyright on contributions via a Contributor License Agreement or similar. This is arguably "fundamentally broken" and experience shows it does hamper profits (Sun wanted to control the community around its projects, see how it ended up). Otherwise, they will be bound to their open license just like anyone else, and your friend's arguments just does not make sense. – ignis Jul 16 '15 at 6:54
  • The trend I have seen is rather to 1) employ the developers and/or acquire the smaller company, or 2) fork, develop a better version, and become the de-facto new developers. Either way, the developers know the software better than anyone, having them in your company is a guarantee of the best technical support and attracts those customers that are willing to spend the most. Remember that with FOSS you do much more money with support contracts than by selling licenses. – ignis Jul 16 '15 at 7:49
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"Stealing" code is copyright infringement, which is obviously avoided by most legitimate companies. Losing a copyright infringement suit can easily destroy most companies. On the other hand, without patents, reverse-engineering and feature-matching is perfectly legal and done all the time. Some unethical companies can very well be doing the former whilst pretending to do the latter, and this is where access to the source code lets them do that easily. But as soon as these companies become big enough and of consequence, they quickly clean up their act - DivX being a prominent, closed-source example, where it's suspected that the initial release was based on infringing Microsoft's source code.

Therefore it highly depends on how visible and active those FOSS projects are. It's important to remember that not all FOSS projects are Linux, GCC or Mozilla, and it also depends on your adversaries.

  • Large and active projects are practically immune; their tremendous goodwill and visibility makes it very risky to "steal" from, and their pace of development makes it hard to out-compete them regardless.
  • Medium-sized projects can suffer but the damage is limited. The reason is, again, if unethical competitors get large enough, it also makes them more attractive targets of lawsuits, so they either stay small or clean up. For example, FFmpeg - a suite of FOSS audio/video codecs - is a popular target of copyright infringement. Although most are minor infractions of their (L)GPL licenses, no doubt some are blatantly infringing.
  • Small projects can indeed be undercut. If the market is small enough to stay under the radar of lawsuits, an unethical company can easily claim the code as their own, release a closed-source competitor and crowd out the market through providing superior value. Here's an example:

    A competitor [to DikuMUD], at the time, also had based theirs on the same codebase, and they opted to blatantly ignore the copyright, rip out all traces of it, and basically lie to everyone including themselves. Their logic was "none of the original code exists" and "we have done massive rewrites and improvement" and generally ignoring the fact that they started with 20,000 lines of code. They were charging for items in the game, and making too much money to stop.

  • An excellent, high-quality, well informed answer like always! – Zizouz212 Jul 16 '15 at 5:23
  • Thanks for the answer but I was hoping for specific examples where releasing code under a free and open license caused small companies to be muscled out by larger ones. DikuMUD specifically was not FOSS (see en.wikipedia.org/wiki/DikuMUD#DikuMUD_license) so this was a case of straight copyright infringement. As I said in the question, it's "stealing" only in an emotional sense, not in a technical one, as I was looking for small companies that actually put their software under a free and open license which means usage that complies with the license couldn't be considered theft. – abetusk Jul 16 '15 at 5:26
  • @abetusk I must say then, your intentions render the question slightly broad in that matter – Zizouz212 Jul 16 '15 at 5:35
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    @abetusk in that case you may struggle to find examples, since it would be using the FOSS project as intended. That is, if someone is concerned that others can repackage the project, resell and crowd out the original, why would they release as FOSS in the first place? On the other hand, you could consider Mac OS X "crowding out" the BSDs, or Safari/Chrome "crowding out" KHTML as examples. – congusbongus Jul 16 '15 at 5:36

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