ESTC License change

Big news yesterday. ESTC will now follow SSPL same license as MDB

This is being well received as it should. So looks like AWS and others can sell the current free OS version without conflicting with the license. But any improvements they make will come under SSPL which means they need to share the source code and they may be unwilling to do that. Analysts are liking it. So, is the market. I think this overhang will help address the relatively lower valuation of ESTC over the last 12 months or so.…


Texmex posted about the license change at Elastic to make their previously open source offering more similar to the MongoDB model. Here was the Elastic blog announcing this.

They followed that up with Elastic CEO Shay Banon’s blog as to why they felt they had to make that change, because of Amazon’s (some would say “questionable”) competitive practices.

Our license change is aimed at preventing companies from taking our Elasticsearch and Kibana products and providing them directly as a service without collaborating with us.

Our license change comes after years of what we believe to be Amazon/AWS misleading and confusing the community - enough is enough.

We’ve tried every avenue available including going through the courts, but with AWS’s ongoing behavior, we have decided to change our license so that we can focus on building products and innovating rather than litigating.

AWS’s behavior has forced us to take this step and we do not do so lightly. If they had not acted as they have, we would not be having this discussion today.

And here is Amazon AWS’s blog response to Elastic’s license change stating they will create a fork.…

This means that Elasticsearch and Kibana will no longer be open source software. In order to ensure open source versions of both packages remain available and well supported, including in our own offerings, we are announcing today that AWS will step up to create and maintain a ALv2-licensed fork of open source Elasticsearch and Kibana.

They go on to take some potshots at Elastic…

Last week, after reneging on this promise, Elastic updated that same page with a footnote that says “circumstances have changed.”

Elastic knows what they’re doing is fishy. The community has told them this (e.g., see Brasseur, Quinn, DeVault, and Jacob). It’s also why they felt the need to write an additional blustery blog (on top of their initial license change blog) to try to explain their actions as “AWS made us do it.”

It’s all a very interesting and public back-and-forth that I feel will benefit Elastic in the near term, and long run. My only experience with a (very) similar instance of this was MongoDB and AWS, which has not turned out badly for MDB as far as I can tell. ESTC has had a good run since the pandemic, in contrast with their first year and a half of public existence when they seemed pretty range bound and undervalued. They’ve consistently grown well and are actually one of the somewhat relatively undervalued companies we look at here (although I don’t think many still own it). But I think they will continue to get more respect from Mr. Market. I used to own a larger amount of ESTC, but reduced it to a relatively small holding of about 4% currently, although I’m looking at increasing it some.

I don’t claim to understand the technology, I just try to follow the financials and business potential. Having said that, I know that Datadog uses Elasticsearch as a core component of their infrastructure, can someone more knowledgeable comment on whether or not this license change at Elastic will affect Datadog at all?


“Open Source” is a real mess. It always has been, but now it’s gotten worse.

The new SSPL “Server Side Public License” that MongoDB pioneered was, in my view, a necessity for Open Source to survive in the SaaS world. What has happened, and Amazon’s AWS is the worst offender, is that companies took Open Source projects and hosted them on their servers, charging for them without any giving back to the Open Source community. No money, no/little code going back to the project. This was not, the intent of Open Source, which was to provide functionality that could be incorporated into products sold for money (or not), with the expectation that as those money-making products found bugs, the companies would send those bug fixes back to the Open Source project. Same for feature enhancements.

If you think about MongoDB, the idea was to your web site, say Shutterfly, could use an Open Source database to organize photos being stored and accessed. Shutterfly can charge for its services and could keep its special sauce of photography related functionality private as long as bugs or features made to the database code were sent back to the Open Source project. All good.

But now what’s happening is that Amazon is simply hosting Open Source code on its servers (for MDB as DocumentDB, and for ElasticSearch as, well, ElasticSearch Service). It’s not incorporating these Open Source projects into some other product that adds value or serves up specific application functionality, it’s providing an Open Source Project as a service (OSPaaS?). But, this takes away a revenue stream from the companies actively supporting the Open Source project.

What the SSPL terms say is that if you’re not incorporating the Open Source code into a project that does not itself have the same primary purpose (see this email from MongoDB:… ), nothing changes, but if you’re essentially creating a new version or instantiation (eg, SaaS) of the same project, then you yourself have to abide by Open Source and make your code Open Source as well.

Amazon doesn’t want to make its own code Open Source, of course. And they don’t want to pay a license fee to Elastic or MongoDB either, which I think they should.

If you care, the OSI (Open Source Initiative) defines Open Source here:

1. Free Redistribution
The license shall not restrict any party from selling or giving away the software as a component of an aggregate software distribution containing programs from several different sources. The license shall not require a royalty or other fee for such sale. (emphasis added)

There are 9 other items as well. At any rate, OSI wasn’t going to approve the SSPL for MongoDB and it certainly isn’t going to approve it for Elastic, meaning those companies can’t claim the Open Source label anymore, even though for most previous uses (eg Shutterfly) they remain legally usable as before.

Some of the reasons companies choose Open Source software include the quality and integrity of the software (lots of eyes looking at means there are no hidden data thefts and any security vulnerabilities are discovered and fixed quickly), but also the security of availability should the providing company go out of business or just want to charge too much. Both MongoDB and Elastic are beyond those concerns in my view.


I hesitate to comment on this board, because I am still just lurking and trying to learn. But…I spent several years as the director of communications for an open source software company, so I feel like I have at least something I can contribute in the way of understanding this change and explaining it in layman’s terms.

Open source software, at its heart, is all about community. The code is created and freely distributed; users of the code create new things with the code and contribute those new things back to the community as well. The ideology is that collaboration is the key to innovation. Even commercial software engineers will contribute work back to the community, basically volunteering their time, to help with bug fixes and patches that improve the code (and therefore what can be built from the code) overall.

If an entity wants to create commercial software using open source code, they do so under a different license which they purchase from the OSS originator and that allows them to have proprietary code, or basically IP which they don’t have to share back with the community at large. This secondary commercial license is what Elastic has created with this change.

Amazon taking the Elastic code, and commercializing it on a repackaged platform (and using the Elastic brand name) goes against everything OSS stands for, which is why the Elastic founders are writing such impassioned blog posts on the subject.

Based…](">Based) on this article and quote from DataDog, it would appear that they also operate on the OSS philosophy, contribute back to the user base and code, etc. which would mean this secondary license for commercial architecture would have no impact on their dealings with Elastic. Further, if they wanted to build proprietary (commercial) software using the Elastic code, they would simply use it by purchasing the other license. I hope that helps explain!

“Datadog as a monitoring service would not exist without open source and we make sure to open source all our client code, libraries and in general, contribute back in any way we can (such as being sponsors of community conferences such as this and DevOpsDays).”


Amazon taking the Elastic code, and commercializing it on a repackaged platform (and using the Elastic brand name) goes against everything OSS stands for, which is why the Elastic founders are writing such impassioned blog posts on the subject.

As you can tell from my prior post, I agree.

However, the OSI (Open Source Initiative) itself apparently does not agree and refuses to sanction the SSPL promoted by MongoDB and now Elastic. Note that Elastic was itself very strongly aligned with OSI and the principles of Open Source, but abuse by Amazon and refusal by OSI to do anything about it has put things in a bad position.


There is more than a little bit of idealism in the OSI and crowd-developed software, in general.

I think it was about a year ago, someone suggested that Elastic may not ever make money, because the founder appeared to be more zealous about “open source” than about his company’s product as a money-making effort. (It may have been Saul, but it may not have been, too.)

1 Like

Amazon taking the Elastic code, and commercializing it on a repackaged platform (and using the Elastic brand name) goes against everything OSS stands for, which is why the Elastic founders are writing such impassioned blog posts on the subject.

There is a long history of charging for the hosting services related to Open Source Software - which is basically what AWS is doing. It seems that Elastic needs to come up with a better offering and start competing rather than using license manipulation to try and limit what Amazon can do. Building a business on OSS is risky - you get the advantage of a lot of adoption while you are small, but run the risk that your business can be overtaken by others who are better at packaging it up.


There’s a long history of taking OSS and packaging it, with some additional proprietary software, too. See also: Red Hat Linux, e.g.

There’s a long history of taking OSS and packaging it, with some additional proprietary software, too. See also: Red Hat Linux, e.g.

Red Hat has a different business model. They make their money on installation, maintenance and support. That was viable back in the day (like 10 years ago), but today the Cloud has made installation and maintenance trivial, even automatic.


So as we have been discussing we are seeing the same replay of the AWS/MDB license issue from 2 years ago. But what interests me is how AWS is reacting. In this case AWS wants to continue to support the open source Open Distro and try to match ESTC’s capabilities going forward. But with MDB they do not open source their Documentdb. Anybody see the technical business advantages for AWS approach towards ESTC?

1 Like