Two of the most important tech trends today are public cloud infrastructure and open-source software. Public cloud vendors allow enterprises to run storage and computing functions in outsourced public data centers, saving on costs and speeding up innovation. Open-source software is "open" to outside developers to use, modify, and distribute without a license. The idea behind open source is that in exchange for sharing code, innovation occurs at a faster pace.
Recently, however, these two tech segments have been colliding. Open-source database vendor MongoDB (NASDAQ: MDB) made a move last fall to curtail what it viewed as open-source abuse by the cloud giants, specifically Amazon (NASDAQ: AMZN). It claimed it was using MongoDB source code for its own in-house offerings without contributing anything back to the open-source community.
MongoDB then unveiled a new license called SSPL, which mandated that any company that distributes its underlying code contribute the new distribution software code back to the community, or purchase a license. However, that got pushback from the open-source community, so MongoDB announced it was reversing the policy on its recent earnings call -- though it's working with the community to curb abuse in other ways.
A few months later, Amazon unveiled DocumentDB, which is basically a MongoDB imitation, on top of its own infrastructure. It's not clear whether MongoDB saw this coming, or whether Amazon developed DocumentDB in retaliation. Amazon utilized an older version of MongoDB source code unaffected by the SSPL, then "forked" the software, taking up its own proprietary innovation from that point on.
However, Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) just made a move to counter Amazon, positioning itself as a friendlier alternative to the open-source community. Could Google's new policy be something for Amazon to worry about?
The big friendly giant
Google recently announced partnerships with MongoDB, Redis Labs, and several other open-source data management companies. The crux of the partnership is that these companies' offerings will be more tightly integrated into Google's Cloud Platform. Customers will be able to use these select applications from one unified Google Cloud interface, rely on Google's technical support for these apps, and receive a unified bill for all.
Financials were not disclosed, though TechCrunch suggested some sort of profit-sharing arrangement. While these open-source companies probably don't like giving away part of their revenue, Google is also taking care of associated customer support costs; in addition, some revenue on wider distribution is certainly better than nothing, which is what these companies receive when a user opts for Amazon's in-house imitations.
Google's different open-source philosophy
Google's policy on open source has two possible motivations. One is that it has been supportive of open-source projects as a philosophical matter. Google has originated or contributed to many prominent open-sourced projects in the past, including Kubernetes, a container-programming platform it open-sourced in 2014; Tensorflow, a machine-learning programming software; and about 2,000 others. MongoDB's founders were also founders of DoubleClick, which Google purchased in 2007, so the relationship between Google and these companies goes far back.
Google may also see this as a way to catch up to AWS. Google's Cloud Platform has made great strides in the past year, but research firm Canalys estimates it still only has about 6.8% of the cloud infrastructure market, compared with AWS' 31.7% share.
It's possible Google's move may, around the edges, persuade some to use MongoDB on GCP vs. DocumentDB. Amazon touted DocumentDB as not just an imitator but an improvement over MongoDB, due to latency and performance issues. Should Google's integration reduce those types of performance issues, it could take away a reason for switching to DocumentDB. MongoDB users wouldn't have to worry about cloud lock-in on AWS -- while shifting clouds would still likely be a pain, one should theoretically be able to move a MongoDB database among clouds easier than switching from an Amazon database to another database on a different cloud.
Amazon should be careful, but not worried
As Amazon has done on its e-commerce site, where it's has taken flak for releasing its own private-label products that compete with popular third parties, Amazon appears to be attempting the same on AWS. It's not as if MongoDB can refuse to sell via AWS; it's just too big. MongoDB management was even careful to emphasize that it has a "strong partnership" with Amazon in a press statement regarding the Google deal.
The ascendance of open source will continue to generate debate as to how these services get monetized. After all, we live in a capitalist system, and MongoDB's recent licensing experiment reflects the complications of sharing important software code. Therefore, tech investors should monitor how open-source companies continue to satisfy both community members and investors alike.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Billy Duberstein owns shares of Alphabet (C shares), Amazon, and MongoDB. His clients may own shares of the companies mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and MongoDB. The Motley Fool has a disclosure policy.
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