Is Open Source the Perfect Nash Equilibrium?

21 Jul

If your company develops software, you are probably using open source software somewhere in your company. (I define open source software as any piece of software which is written by multiple companies/or­ga­ni­za­tions.) My hypothesis is that if you want your company to be as profitable as possible, it must reach a Nash Equi­lib­ri­um with respect to open source software. To reach this equi­lib­ri­um, your company must be both using and con­tribut­ing to open source software.

There are a number of companies which feel that their employees should not be con­tribut­ing to the open source community because the company is paying the employee and therefore should own the work. On the surface this seems like a very profit oriented line of thinking, but it is flawed. The problem with this line of thought is that if every company did this, most of the companies would not be viable. For all companies to succeed, a Nash Equi­lib­ri­um must be reached. This equi­lib­ri­um is reached when all companies both use and contribute to the open source community.

To better explain what I mean, I use the example from the movie A Beautiful Mind. In the scene where John Nash “dis­cov­er­s” his equi­lib­ri­um, a group of women walk into the bar; an attractive one in the middle surrounded by a number of other less attractive women. Nash realizes that if all of the guys were to approach the attractive one in the middle, they would all go home alone. However, if they are to all ignore the one in the middle, and each approach one of the other women, they all stand a good chance of leaving with someone. But, if even one of the men stray from the equi­lib­ri­um and attempt to attract the most attractive women, the other men will become jealous and attempt to attract her as well.

The same is true with the use of open source software. If all companies attempt to only use open source software without con­tribut­ing, other companies will not see the advantage to con­tribut­ing and everyone will suffer. Whereas, if all companies who use open source software also contribute, all companies will benefit and profit.

Don’t get me wrong, I am not advocating that all companies release all of their software as open source. However, most companies do not actually have as much in­tel­lec­tu­al property in their software as they think they do. What makes most software companies successful is the support they provide and the ease- of-use of their software. Numerous companies have figured this out and built successful companies around open source software: RedHat with Linux (and many other projects), Sun (now Oracle) with MySQL (and other projects), Cloudera with Hadoop, and many others…

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