News & Insights

Shining a Light On Oracle’s Unfair Java Licensing Practices

Part Two of a Three-Part Series

By Joel T. Muchmore and Arthur Beeman, Founding Partners, Beeman & Muchmore, LLP

The phrase “to have one’s head in the clouds” is often used to convey that someone does not know the facts of a situation or is otherwise out of touch with reality. 

In our first blog post dedicated to reviewing Oracle’s Java licensing terms through the lens of the nine “Principles of Fair Software Licensing,” we urged customers to—in a manner of speaking—get their heads out of the clouds when managing Oracle Java. To that end, we highlighted two foundational principles: that licensing terms be clear and intelligible and that licenses cover reasonably expected software uses. 

In this second blog post, we encourage Java users to put their heads right back in the clouds – or, more precisely, into the mindset of “cloud computing” when navigating the pitfalls of software licensing in the cloud. 

Traditional on-premises computing is being left behind. Over half of business’ workloads are in the public cloud today, according to Flexera’s 2024 State of the Cloud Report.  

Given the growing presence of cloud computing and its capacity for seemingly unlimited growth, the Coalition for Fair Software Licensing has dedicated four of its nine principles to assuring freedoms in the cloud:

  • The freedom to bring previously purchased software to the cloud;
  • The freedom to run on-premises software on the cloud of your choice;
  • The freedom from retaliation for cloud choices; and
  • The freedom for software licensing fees in the cloud to receive equal treatment.

Over the last several years, Oracle has all but ensured that Java customers have few of these freedoms—undermining the autonomous future of the cloud. The purpose of this blog is to shine another light on Oracle’s Java licensing practices, this time with a focus on the interplay between the cloud and CFSL’s four “freedom” Principles. To be clear, this interplay is complex, and its application to actual deployments is not intuitive. The savvy and diligent Java user should seek legal counseling regarding their intended Java use on the cloud to ensure license compliance and/or containment of risks.

Using Oracle Java in the Cloud

There are essentially two Java licensing models currently in play: (1) Oracle Java SE Subscription and Oracle Java SE Desktop Subscription (“legacy” or “processor-based”) and (2) Oracle Java SE Universal Subscription (“employee-based”). The legacy model, primarily offered by Oracle between April 2019 and January 2023, measures the number of Java installations, offering term licenses on those metrics. Despite the official retirement of the legacy model, many customers are currently licensing Java through this model by way of multi-year term agreements.

Conversely, the employee-based model mandates a license for (at least) every single employee, regardless of whether they use Java or not. This model replaced the processor-based model in January 2023 and continues to be Oracle’s sole public general-use commercial Java offering.

In Oracle’s License Definitions and Rules, both Java subscription models contain similarly opaque clauses regarding use in the cloud:

Your right to use the specified Oracle Java SE Subscription Program(s) for Your internal business operations includes using the Oracle Java SE Subscription Program(s) to run Your Java applications as a cloud service, subject to the terms of the Master Agreement. For the avoidance of doubt, You shall not make the Oracle Java SE Subscription Program(s) themselves available as a cloud service.

From this skeletal grant, one can glean that there is at least some right to use a current Java term license “as a cloud service,” albeit with restrictions. Practically, this limited allowance presents as many questions as it answers. 

For example:

  • What is a “cloud service”? Is it less than simply permitting Java deployment in a cloud? 
  • What constitutes “Your Java applications”? Is it limited to proprietary Applications developed by the customer (such as in the OTN License)? Or does it also include separately licensed third-party applications?
  • Does this equally apply to public clouds and internally hosted clouds? 
  • Where is the line drawn between running “Java applications as a cloud service” and making Java “available as a cloud service”? 
  • Does the limitation on making the programs “available as a cloud service” impose a greater restriction than with regard to on-premises deployment? In other words, if Java is deployed on-prem, is there a comparable restriction on making those installations available for internal use outside the context of running apps?  

Pricing Oracle Java in the Cloud

Oracle has created a policy document entitled “Licensing Oracle Software in the Cloud Computing Environment.”  While Oracle acknowledges that its policies are merely “for educational purposes only,” the document should be read as a road map as to how Oracle will leverage cloud deployment with Java users, especially in regard to pricing. 

Oracle’s cloud policy runs afoul of the most fundamental freedom articulated in CFSL’s Principles – the freedom to run software on the cloud of your choice. In its cloud policy, Oracle designates only two cloud providers – AWS and Microsoft – as “Authorized Vendors” and further circumscribes deployment to certain “Authorized Cloud Environments” (namely, Amazon EC2 and RDS, and Microsoft Azure). This policy does not appear to be based on technical restrictions but rather Oracle dictating which cloud customers can and cannot use.

Oracle also reveals discriminatory fees in its cloud policy: “When counting Oracle Processor license requirements in Authorized Cloud Environment, the Oracle Processor Core Factor Table is not applicable.” In other words, the standard 0.5 multiplier that reduces the core count by half is removed from the equation, resulting in twice the number of needed licenses in the cloud as opposed to on-premises. 

Importantly, this is styled as a grant permitting users to deploy Java licenses in the selected clouds at an increased price. Oracle is silent regarding Google Cloud Platform as well as offerings by Alibaba, IBM, and Salesforce (just to name a few). And, while the price hike only applies to the legacy, processor-based, licensing model, the policy itself is fatally unclear whether a customer licensing Java on the employee-based model is similarly limited to deploying in “Authorized Cloud Environments.”

Oracle is not, however, silent regarding the availability and benefits of deploying Java licenses in the Oracle Cloud Interface (OCI). Oracle enshrines favorable processor/license ratios, but only for its own cloud

In other words, in Oracle’s world, legacy Java software licenses do not operate the same in and out of the cloud. Java users negotiating terms for a software license in the cloud are vulnerable. Going forward, and remembering that Oracle’s cloud policy is not binding, Java users should bear in mind the Principles of Fair Software Licensing in negotiations. 

The foundation of the Principles is grounded in the single most important issue for businesses as they enter the cloud – cost management and containment. In Flexera’s 2024 State of the Cloud Report, respondents stated that their current public cloud spending was 15 percent over the original budget and is expected to grow by 31 percent in the next 12 months. Escalating costs will only worsen in the cloud if Java users are deprived of the Principles of Fair Software Licensing.

Cloud computing is changing not just how we do business but how we live and view the world. Its potential for cost savings, safety, system mobility, improved data insights, and superior collaboration remains boundless. Sunny days lay ahead in the cloud, but only if freedom and fairness prevail for those relying on cloud technologies, including Java users.

Joel T. Muchmore and Arthur Beeman are the founding partners of Beeman & Muchmore, LLP, a law firm providing tailored software licensing and audit defense counseling.

As a healthcare software provider, our ability to utilize the cloud provider of our choice impacts more than just our business – it affects the health and well-being of patients everywhere. Restrictive software licensing imposes real-world threats like pricing increases that directly influence how we are able to assist healthcare providers and the patients they serve. We support the Principles of Fair Software Licensing to protect both cloud customers and the communities they serve.

Healthcare Technology Company

Cloud computing has brought low-cost, on-demand IT services to every corner of the economy, raising productivity and innovation levels at enterprises of all sizes. And intense competition and innovation among cloud providers continues to drive costs down while adding new customer capabilities.

But some incumbent IT vendors are imposing restrictive software licenses to limit how customers can take advantage of competing cloud offerings.

NetChoice supports the Principles of Fair Software Licensing as a roadmap to drive innovation, serve customers, and promote competition in IT services.

NetChoice

Frustration, use limitations, threatened audits, and significant additional expenses. That has been our experience with unfair software licensing. Organizations need transparency from their software providers.

We support the work of the Coalition for Fair Software Licensing to protect customers and ensure IT spend is effective and free from surprises.

Global Building Materials Supplier

Unfair software licensing practices in the cloud are a global issue, and CISPE is pleased that the Coalition for Fair Software Licensing is taking the Principles to North America.

Originally launched and jointly conceived by customers and cloud providers in Europe, we encourage customers around the world confronted with unfair software licensing practices to consider the Principles as a powerful framework for positive change.

CISPE

As start-ups, it is essential that we retain flexibility to use the cloud infrastructures that fit best our aspirations and those of our customers. The Principles of Fair Software Licensing help the next generation of software and service providers to avoid lock in and ensure a fair playing field for all. Seeing their adoption in North America adds weight to this important movement for innovators in Spain and worldwide.

Carlos Mateo Enseñat

President, Asociación Española de Startups (AES), and Promoter of the NUBES Initiative in Spain

Developed in Europe by CIOs and cloud providers, the Principles of Fair Software Licensing are supported by digital organizations in Italy such as Assintel. Assintel welcomes the Coalition for Fair Software Licensing’s embrace of the Principles in North America. Fair licensing of software in the cloud is a global issue for businesses of all sizes. In Italy, our government recognises this challenge and just updated its antitrust bill to put an end to unfair software licensing practices.

Businesses in North America can benefit just as well as those in Italy from a best practice framework for software licensing.

Paola Generali

President, Assintel

As a longtime advocate for open systems and open networks, CCIA supports the competitive ideals reflected in the Principles of Fair Software Licensing for Cloud Customers as the Coalition embarks upon its efforts in North America.

Matt Schruers

President, CCIA

Some legacy software providers are attempting to extend their current on-premise market dominance into the cloud market through aggressive and restrictive contracts, licensing terms, and software audits.

While many promote ‘cloud freedom,’ in actuality they are employing tactics designed to lock out competition and innovation while increasing profits for themselves at the expense of their customers. No longer can legacy software providers be allowed to disguise their predatory practices.

I am proud to align myself with the Coalition for Fair Software Licensing in shining a light on these issues and putting forth actionable solutions.

Craig Guarente

Founder and CEO, Palisade Compliance

Despite the current spotlight on antitrust issues in Washington, behemoth software providers continue to misuse their legacy status and market power to target business customers with predatory audits and trap those customers in restrictive licensing agreements.

Through our practice — dedicated to representing software licensees against these very tactics — we have seen first-hand the real world effects of such licensing practices. Both growing and established companies are routinely kneecapped by unexpected costs, forced to waste immeasurable resources in spurious audit defense, and stymied in their efforts to make the technology changes they believe are necessary for their business.

We support the Principles of Fair Software Licensing and believe they represent an excellent and necessary step towards much needed business consumer relief and will help open the market to smaller providers in the cloud ecosystem.

Arthur S. Beeman & Joel T. Muchmore

Founding Partners, Beeman & Muchmore, LLP

Consumers benefit from a competitive, dynamic information technology marketplace. Competition drives innovation and ensures that customers get the benefit of fair pricing.

Overly restrictive, abusive licensing agreements from IT companies with market power, on the other hand, impose costs on government and corporate customers of reduced innovation and long-term price increases. We support the Principles of Fair Software Licensing and policies that encourage innovation, competition, and licensing practices that give customers the freedom to mix and match solutions from a wide variety of vendors.

This is particularly critical in the market for cyber security solutions since hackers are innovating every day, leveraging new strategies, new tactics, and new technologies to support their illegal campaigns. The only way to defeat nation states and trans-national criminal organizations is for the government to ensure that the IT market for cyber security is as competitive as possible and customers have the freedom to choose.

Cybersecurity Provider

The Alliance for Digital Innovation supports the Coalition for Fair Software Licensing’s efforts to protect customer choice and advocate for access to modern, secure commercial solutions.

As advocates for public sector customers, we think that government mission owners and enterprise information technology and cybersecurity leaders should have access to as many modern commercial solutions as possible.

These solutions are critical components to driving digital innovation and security in the public sector, and ADI supports removing barriers that slow adoption of those solutions, including restrictive licensing practices.

Alliance for Digital Innovation

As an attorney, I have represented enterprise software customers for years and have routinely seen enterprise software companies deploy predatory business practices, including falsely inflating alleged non-compliance gaps, to increase profits and limit customers’ ability to go elsewhere.

These practices produce causal effects throughout the economy including increased prices, as businesses across various sectors are forced to spend resources dealing with these unforeseen issues. I support the work of the Coalition for Fair Software Licensing to help my clients and enhance an economy that provides opportunities to all.

Pam Fulmer

Founder and Partner, Tactical Law Group LLP

We believe licensees should be able to deploy licensed software in a way that best suits their business, including their choice of cloud provider at no additional cost. Having experienced licensing practices inconsistent with the Principles of Fair Software Licensing, we support the Principles and urge others to support both them and the Coalition for Fair Software Licensing.

Insurance Industry Business

Startups, often operating with limited resources, need the freedom to assemble the technology infrastructure that best suits their needs.

Cloud computing infrastructure is central to startup growth, and the Principles of Fair Software Licensing will help maintain accountability, mitigate unnecessary costs, and promote innovation in this environment.

Industry-wide adherence to these principles will level the playing field for startups.

Engine

Get Involved

Learn more about joining the Coalition or expressing support for its Principles