Why Open Source Software Dominates Modern Tech: Origins, Economics, and Impact

The swift development of information technology, exemplified by the Internet, has dramatically impacted the entire economic system by accelerating knowledge accumulation and reducing information costs, thereby lowering transaction costs and prompting systemic changes such as new business models and production methods. Open Source Software (OSS) is a typical illustration of this shift.

Since the late 20th century, OSS has achieved remarkable technical and commercial success. In 2018, notable milestones included IBM’s $34 billion acquisition of Red Hat, Microsoft’s $7.5 billion purchase of GitHub, Salesforce’s $6.5 billion acquisition of MuleSoft, and Adobe’s $1.68 billion purchase of Magento—highlighting that only a handful of software firms exceed a $100 billion market value.

OSS challenges classic public‑goods theory: it is a pure public good produced voluntarily by individuals without compensation, yet it thrives through massive, unpaid contributions from millions worldwide. Moreover, despite being a highly complex product, OSS development operates as a loosely‑structured, informal organization without hierarchical authority, yet it consistently delivers high‑quality software through global, self‑selected collaboration.

The article outlines four research questions: the reasons and motivations behind OSS emergence, its impact on the IT industry and structural changes, the organizational characteristics and production processes of OSS communities, and the insights derived from these phenomena.

The series will be divided into five articles covering macro, meso, and micro perspectives, with this first part focusing on the definition and development stages of OSS.

1. What Is Open Source Software?

Before analysis, it is necessary to clarify background concepts that are often confused. Broadly, open source software refers to computer software whose source code is publicly available and may be freely studied, copied, modified, and redistributed. Narrowly, it conforms to the Open Source Initiative (OSI) definition.

1.1 Clarifying Related Concepts

Free and Open Source Software (FOSS or FLOSS) denotes software that is both free software and open source, allowing anyone to use, copy, study, and modify the code.

Not all publicly available source code is OSS : some commercial products provide source code for inspection only, without granting modification or redistribution rights.

OSS is not public domain software ; it remains under copyright, with usage governed by its license.

OSS is not synonymous with free software ; while OSS is often free of charge, not all free software meets OSS criteria.

Free Software vs. Open Source : Free software, typically released under GPL‑type licenses, emphasizes user freedoms, whereas many OSI‑approved open source licenses focus on practical benefits and may not guarantee the same freedoms.

1.2 Open Source Licenses

Licenses define the rights and restrictions for software use, modification, and distribution. They fall into three broad categories:

Copyleft : Licenses (e.g., GNU GPL) that require derivative works to retain the same licensing terms.

Permissive : Licenses (e.g., MIT, BSD) that impose minimal restrictions on redistribution.

Non‑copyleft : Licenses that grant redistribution and modification rights but may allow additional restrictions.

1.3 Shared Property Nature of OSS

Software intellectual property is a hybrid of patents (protecting algorithms) and copyrights (protecting expression). Most jurisdictions treat software primarily under copyright law. Commercial software often relies on copyright, trade secrets, and occasionally patents to protect its assets.

OSS employs a “reverse‑copyright” (copyleft) mechanism, using copyright law to ensure that the software remains open and free, as defined by its license.

The OSI outlines ten criteria for open source software, including free redistribution, source code availability, allowance for derived works, non‑discrimination, and technology‑independent licensing.

Through this reverse‑copyright framework, developers and users worldwide can collaboratively create, improve, and freely use OSS, embodying a true shared‑ownership model.