A CEO is calling out Amazon Web Services for encroaching on his company's turf — and some experts are supporting Amazon (ESTC, AMZN)

Andy Jassy AWS

Earlier this week, Amazon Web Services announced Open Distro for Elasticsearch — its own version of Elasticsearch, an open source software project created by publicly-traded software company Elastic.
On Tuesday, Elastic CEO Shay Banon wrote a blog post in response to Amazon, taking it to task for what it sees as co-opting the Elasticsearch brand and community for its new project.
Open source software insiders we spoke to have mixed feelings about this episode: Some say that Amazon is purposely trying to split the Elasticsearch community, while others say that imitation is the sincerest form of flattery and Elastic should keep on trucking.
This also raises questions about the business model of Elastic and other smaller open source software-based companies. Shares of Elastic were down about 2.5% on Tuesday, the first full day of trading after Amazon's announcement.

Earlier this week, Amazon Web Services announced Open Distro for Elasticsearch — its own version of Elasticsearch, an open source software project created by publicly-traded software company Elastic.

Notably, this Open Distro includes several features for Elasticsearch that normally can only be found in Elastic's paid, premium version of the software. Shares of Elastic were down about 2.5% on Tuesday, the first full day of trading after Amazon's announcement.

On Tuesday, Elastic CEO Shay Banon took Amazon to task in a blog post accusing the cloud giant of misusing Elastic's brand, purposely co-opting its technology, and masking its actions "with fake altruism or benevolence."

Elasticsearch is an open source search project originally created by Elastic and used by companies like Uber and Tinder. Since Elasticsearch is open source, it's free and legal for anyone to use, modify or distribute as they see fit — including by Amazon, as it's doing here.

In the blog post, Banon writes that this isn't the first time Elasticsearch has been forked — the term for when an open source project is copied and then modified to create a totally new software project with its own community and priorities. He writes that several Chinese companies have done it, and now, Amazon, too.

"There was always a 'reason,' at times masked with fake altruism or benevolence," Banon wrote in a blog post. "None of these have lasted. They were built to serve their own needs, drive confusion, and splinter the community."

Open source industry experts tell Business Insider that it's not so cut-and-dried. Some say it's a sign of how hard it is for smaller open source companies to compete with the likes of Amazon, while others take Open Distro for Elasticsearch as a sign that Amazon is working to fight the perception that it doesn't give back to open source.

"I think it's not surprising things came to this point," Erica Brescia, co-founder and COO of open source software company Bitnami, told Business Insider. "It was inevitable that companies built around open source projects are going to try to innovate their business model. I think it's the beginning, not the end, in evolving business and strategy for open source companies."

Calling out Amazon

Amazon has said that it created Open Distro for Elasticsearch because Elastic, the company, was putting too much of its proprietary code into the main Elasticsearch project. That put AWS customers at legal risk, the company said, because it wasn't clear what was free-to-use open source and what was commercial, proprietary code. By running its own, vetted version of Elasticsearch, Amason could offer customers a trusted version of the software, it says.

"From our perspective, open source should be open source, and proprietary software should be proprietary," Amazon Web Services' Andi Gutmans said at the Open Source Leadership Summit on Tuesday, addressing Open Distro. "The first thing is, if you do open source you do open source. If you do proprietary, you do proprietary."

In his blog post, Banon said that others have bluntly copied the proprietary code in question — including, he says, Amazon.

"Our commercial code has been an 'inspiration' for others, it has been bluntly copied by various companies, and even found its way back to certain distributions or forks, like the freshly minted Amazon one, sadly, painfully, with critical bugs," Banon said. "We kept on being focused on building great products and communities, that users love."

Banon also expressed concerns about Elastic's brand being "abused, hijacked, and misrepresented." Amazon has said that it intends to contribute code back to the main Elasticsearch project, which doesn't seem to impress Banon.

"Companies have falsely claimed that they work in collaboration with our company, topically Amazon," Banon wrote. "We did not let it distract us, we kept on building great products and communities, that users love. Dilution of focus is the enemy of a company, and we never let it affect us."

In addition, Banon addressed how Amazon wrote that it offered Elastic to "dedicate significant resources to help support a community-driven, non-intermingled version of Elasticsearch." Instead, Banon says, Amazon was "demanding preferential treatment," and claims that Elastic does not give any developers priority over others.

"When companies came to us, seeing our success, and asked for special working relationship in order to collaborate on code, demanding preferential treatment that would place them above our users, we told them no," Banon wrote. "This happened numerous times over the years, and only recently again, this time with Amazon."

Some are skeptical of Amazon

Amazon says that Open Distro is not a fork, and that it intends to contribute enough code back to the main project to keep it in parity with original Elasticsearch. It's an important distinction — if it is a fork, Open Distro could draw away developers and users from the original version of Elasticsearch, splitting the community.

"Amazon's claiming it's not a fork and not a separate offering. However, it clearly is," Joseph Jacks, founder and general partner of OSS Capital, told Business Insider. "Amazon agreed to putting fixes and patches to the upstream communities, but we won't know how that project will unfold."

Jacks says that Amazon forking the code shows that the cloud giant is threatened by open source software and communities, but that it won't win support by treating them like a competitor.

"I think Amazon is better positioned to earn trust and respect of the Elastic user community if instead of treating Elastic with hostility and a competitivity dynamic, they treat them with a partnership dynamic," Jacks said. "That would lead to a better outcome of everyone."

Some think this is working as intended

Others say that Amazon's move is just how it goes with open source, and that it deserves the benefit of the doubt.

"One of the biggest compliments is when someone embraces and adopts it," Craig McLuckie, VP of R&D at VMware and co-creator of the mega-popular Kubernetes open source project, told Business Insider. "Everyone's looking for a villain here, but everyone wears an agenda on their sleeve. From my perspective, this is how open source should work. At the end of the day, a fork is the greatest compliment."

Chris Aniszczyk, CTO and COO of the Cloud Native Computing Foundation, says he thinks it's positive to see Amazon contributing more to open source, and Open Distro solves a real problem for AWS customers. Microsoft, he says, was once seen as an enemy of open source, but it has become a huge proponent, and so too could Amazon.

"Amazon has a historically bad reputation with their relationship to open source, but that's changing," Aniszczyk told Business Insider. "The analogy I'll use is, I spent most of my career hearing that Microsoft is the great Satan of open source. Amazon will change over time."

Previously, Oracle has forked the enterprise version of the Linux operating system, says Luis Villa, cofounder of Tidelift, but it was not a threat to Red Hat or other companies selling their own versions of Linux. Similarly, he does not think Open Distro will pose a major threat to Elastic over the long haul.

Still, Villa says, it's not necessarily a great look for Amazon to have gotten into the Elasticsearch game like this, given its reputation as an aggressive competitor.

"There will be some customers who will need a specific thing Amazon will be able to serve better, but most will benefit from Elastic's upstream project," Villa told Business Insider. "There's more concern that Amazon is an 800 pound gorilla. There will be that perception. Amazon has done a lot lately to say, 'we're great participants in open source.' This set that back a bit."

Raising questions over business models

What stands out to some open source insiders is how this calls into question the so-called open core business model held by many open source software companies. Essentially, companies like Elastic give away the core of their products as open source, while making money by offering better technical support or advanced features.

In recent years, this business model has come under scrutiny, thanks to the rise of major cloud providers like Amazon. Those providers are free to take that open source code, add to it, and resell it as a service to customers for profit — potentially taking customers away from the company that created the software. Indeed, Amazon Web Services has provided an Elasticsearch-based service since 2015, just three years after Elastic was founded.

Banon writes in his blog entry that Elastic's strong relationships with developers and focus on this one market sets it apart.

However, Bassam Tabbara, founder and CEO of open source company Upbound, says that it's a sign that Amazon poses a major threat to open core software companies. Because AWS is so big, and so profitable, it can subsidize the development of the software indefinitely, using it as a draw to bring more customers onto its cloud.

"It comes down to, can an open source project make money on a cloud offering if they're not a cloud provider? If the answer is no, essentially, the cloud providers will be the only ones making money from open source."

Sid Sijbrandij, CEO and co-founder of GitLab, still believes in the open core model. No matter what Amazon does, he says, there are ways to make your business resilient to that threat — like adding more proprietary features, and working harder to close deals with customers of all sizes. At the same time, he says, it's clear that it makes the competition that much more daunting.

"Amazon is doing what's right for their customers. They have an offering of Elasticsearch and they're creating more value for users of open source so I think it's smart for Amazon, but it's a problem for commercial open source companies."

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