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    The Bungee Line was an audio podcast for web developers, covering web API's, software development, and the creation of richly interactive web applications.

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Long Live the SaaS Loophole

Continuing the thread with Simon Wardley, I want to lay out a couple thoughts that Simon’s reply has prompted me to finally put into writing. This is one of two.

In a comment reply, Simon Wardley points out that the aforementioned “SaaS Loophole” is actually a good thing. I agree. To put a finer point on it, one could make a great case that without SaaS Loophole, excellent web search results (Google) and thousands of other freely-available services on the web would have been much longer in coming around. Much of what we love about the Internet today was created by companies that used Free Software as a platform for innovation and a springboard to building a business.

After my talks at LugRadio Live USA and LinuxFest Northwest, a couple of people posted blogs expressing shock or dismay on learning that companies have been using this loophole. Robin Barre of CivicActions, for example, posted:

What saddens me about this talk is that it seems like companies are looking at GPL version 2 as having a loop hole. That as long as they are just “hosting” and not distributing code, then they may forego contributing their changes back to the community. These same companies rely on free and open software to provide their products and services.

I initially took Robin’s whole post to be a bit alarmist, but in follow-up dialog with her, it seems that she was specifically commenting in terms of Free Software principle: “I am frustrated that people feel the need to hide software from one another.”

When bootstrapping a business, it’s often necessary to keep your IP under wraps. Having another entity introduce your half-baked project before you have managed to complete the parts that really emphasize its value can tarnish or destroy the project’s reputation before it ever gets going.

Google still takes great care to protect their search algorithms. Are they wrong to do so? Does their massive amount of valuable contributions–yes, contributions to Free Software, but in orders of magnitude more significantly, their contributions to the usefulness of the Internet itself–in any way offset their protecting the secret sauce that enables their primary revenue stream? While I don’t buy into their corporate credo (“Do No Evil”) as a reason to trust them or like them, I’m personally okay with Google using the SaaS loophole to keep their search indexing algorithm IP a secret. I use many of their services and APIs, and I’d rather have those than have a bunch of upstarts replicating Google’s search capabilities. (Yes, this might hold back innovation in search indexing. On the other hand, it might be promoting it. In my mind, these two possibilities cancel out.)

Simon: I’d be curious to hear how Google could use trademarks and reputation in place of IP protectionism. In your view, is it possible?

Overall, much of this ties into my next related post, which asks, “Is AGPLv3 is Too Radioactive?

4 Responses

  1. Has there been any further efforts to close the SaaS loophole? Do you consider providing software as a service via the SaaS Loophole to still be a viable strategy?
    PS-Thanks for all the helpful posts.

    • @Patrick:
      There is no new effort to close the SaaS/ASP Loophole. No new effort is needed.
      As I said, it’s in GPLv3 by design. But even if its inclusion had been an unfortunate oversight by its architects at the Free Software Foundation (FSF), GPLv3 is the only GPLv3 that will ever be. The GPL would have to be revised to remove the loophole, and that would make it a new version. (Keep in mind that it was many years between releasing GPLv2 and GPLv3. The FSF doesn’t revise its flagship license very often.
      The FSF has handled the SaaS/ASP Loophole quite well, though. They took over managing the Affero GPL, which is now AGPLv3. The very strong copyleft terms of AGPLv3 state that providing access to a software program over a network–that is, allowing someone to interact with any of the software’s functionality–entitles users to the source code. That closes the loophole rather tightly.
      Overall, with both GPLv3 and AGPLv3 as options under which developers can license their open source projects, the SaaS/ASP Loophole is made a choice that developers can choose to enable or restrict with their software. Kudos to the FSF, IMHO.

  2. […] AGPLv3 eliminates the SaaS Loophole. The era of innovation the GPL has fostered would have been substantially different had the license […]

  3. […] The GPL has a known loophole for web applications or other network services. The loophole is not a horrible idea, as mentioned by Dries Buytaert and Ted Haeger. […]

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