News & Insights

Shining a Light On Oracle’s Unfair Java Licensing Practices

Part Three of a Three-Part Series

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

Identifying shared values and what serves the common good is necessary for real change. President Franklin Roosevelt, who was no stranger to social change, said it best: “Rules are not necessarily sacred; principles are.”

Since its inception, the Coalition for Fair Software Licensing (CFSL) has understood the sacredness of principles. It advocates for the universal acceptance and adoption of the “Principles of Fair Software Licensing”—nine principles designed to assure fair play and competition in software licensing. 

On behalf of  CFSL, Beeman & Muchmore, LLP has had the privilege over the last few weeks of embracing CFSL’s principles through a series of blog posts. In each blog, we have discussed the necessity of the principles and demonstrated how Oracle’s Java software licensing practices flout each and every one. In our first blog post, we commented on how the tortuous history of Java in the marketplace breached CFSL’s first two principles – anchor protocols requiring that licensing terms be clear and intelligible and cover reasonably expected software uses. Our second blog post specifically addressed how Oracle’s “cloud computing” policy and Java licensing practices violated yet another four of CFSL’s principles. 

In our third and final blog post, we focus on the remaining three principles:

  • Reducing Costs Through Efficient Use of Hardware;
  • Avoiding Customer Lock-in Through Interoperable Directory Software; and 
  • Permitted Uses of Software Should Be Reliable and Predictable.

The foundation for these three principles lies in the software customer’s freedom to choose how to deploy its software assets and run its own business, untethered to onerous and unreasonable licensing terms imposed by a software vendor. 

That foundation was cracked by Oracle in January of 2023 when it implemented its “Oracle Java SE Universal Subscription,” a draconian employee-based metric that ignores the number of users and focuses instead solely on employee headcount at a customer company. By this metric, the number of licenses required for a customer’s expected Java use is completely uncoupled from the number of actual Java users. Imagine being required to buy a block of tickets for a concert when you just want one ticket or being held to a lease for a three-bedroom apartment when you simply desire a studio apartment. In any context, the rationale behind Oracle’s Java practices can be seen for what it is: unreasonable and unsavory. 

Principle 4: Reducing Costs Through Efficient Use of Hardware

CFSL’s principle mandating efficient use of hardware operates to ensure that diligent IT professionals have the freedom to adjust internal server architecture to control software deployment, and therefore cost, and to clear the path for the adoption of efficient cloud technologies (i.e., blended hardware that is not dedicated solely to that customer). Oracle’s employee-based metric for Java – which, unbelievably enough, also includes employees of the customer’s “agents, contractors, outsources, and consultants that support (its) internal business operations” – renders futile any notions of choice for the Java customer. What you pay in licensing fees under Oracle’s Java licensing terms is not the product of business or IT choices by attentive management but rather the result of an unrelated headcount of employees. And now, according to Gartner estimates, the per-employee subscription model is expected to be, on average, two to five times more expensive for customers. Of course, Garnter’s estimated average doesn’t tell the full story of the not-infrequent licensee with minimal Java usage and a high employee count that potentially faces a price increase of a hundred-fold or more. 

Principle 6: Avoiding Customer Lock-In Through Interoperable Directory Software

CFSL’s principle regarding directory software looks to foster IT environments that employ open standards to protect customers from being locked into a particular directory solution and prevented from being forced to switch providers. And, despite Sun Microsystem’s original tag for Java —  “write once, run anywhere” — Oracle has made such reliance measurably more unpredictable. In fact, according to a recent study, 86 percent of respondents using Oracle Java SE are currently moving or plan to move all or some of their Java applications off Oracle environments following the introduction of the employee-based subscription model. With companies scrambling to remove Java to avoid the prohibitive employee-based metric, it is easy to envision an emerging future in which the very versatility for which Java was once famous becomes a void taking with it the freedoms it once provided. 

Principle 8: Permitted Uses of Software Should Be Reliable and Predictable

Finally, by its principle requiring that permitted uses of software be reliable and predictable, CFSL wants to stop software vendors from making material changes to license terms that restrict customers from previously permitted uses, especially when those customers may have become reliant on those uses. This is critical when considering the reality of how Java is automatically and surreptitiously embedded in many thousands of enterprise applications. Countless companies have been forced to reconsider programs that they have long relied upon due to Oracle’s shifting Java licensing terms. Put simply, CFSL aspires to prevent precisely the chaos that began in January of 2023 when Oracle turned the Java world on its head and imposed the untenable employee-based metric.

* * *

If principles can indeed be sacred, then CFSL promotes principles worthy of sacredness, and the market will be well-served by their adoption.

 

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