EU software liability law could divide open source

The European Commission is proposing that software companies be held liable in Europe for the security and efficacy of their products. How would this affect ISVs?

The world of open-source development could be divided, if the European Commission succeeds in passing a law extending consumer protection rules to software, according to experts.

The Commission proposes that software companies be held liable in the European Union for the security and efficacy of their products.

David Mitchell, senior vice president of IT Research at Ovum, thinks that this may lead to a situation boosting current open-source vendors' business models but making it more difficult for independent developers to thrive.

The proposal is likely to make vendors force customers into support and maintenance agreements upon each purchase, in order to help the former fulfill warranty obligations, Mitchell said.

This is already in line with the business models of current open-source vendors such as Red Hat and Canonical, which sell support services. On the other hand, the "garage open-source model" of independent developers, who do not have the scale to guarantee their products at that level, will likely suffer, Mitchell said in an interview with ZDNet Asia.

Bryan Tan, director of Singapore-based Keystone Law, had predicted in an earlier blog post the "caving in" of open-source software due to similar worries over liability on the parts of independent developers.

"Gone are the days (when) software could be written in a garage by two guys," Tan wrote.

Tan also told ZDNet Asia that the proposed law would likely inflate prices for consumers outside the EU--including the Asia-Pacific region, as a result of the vendors' need to provide insurance. Furthermore, the "death" of some smaller vendors (and an ensuing dearth of competition) would lead to increased prices, he added.

While the Commission has said the proposal is in the interest of consumers, Ovum's Mitchell thinks that a "huge amount of market uncertainty" will be created.

"Customers will find that their existing support and maintenance agreements are now ambiguous, or in contradiction with any new legislation," he said. Businesses would also have to undertake longer testing cycles, resulting in project delays, Mitchell added.

Realistically, liability will be hard to pinpoint because of the interdependency between hardware and software, Mitchell noted. The failure of a piece of software could be blamed on another installed software or hardware portion.

"(The legislation) promises to be a lawyer's dream (come true) but not to deliver any tangible benefit for the customers," he said.

However, Stanley Lai, partner at Allen & Gledhill, thinks that consumers will benefit. While he agrees that software prices will likely rise, "it remains to be seen whether consumers will consider that the price to be paid in return for quality assurance is an adverse effect."

Lai also said it is "premature and oversimplistic" to predict the demise of open-source software. He said with code open and more easily corrected--the oft-quoted "many eyeballs" effect--users and consumers of open-source software may be more likely to get errors fixed through the community and less likely to pursue direct recourse to liability under the proposed legislation.

Victoria Ho of ZDNet Asia reported from Singapore.

 

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