Is cloud computing the Hotel California of tech?

In the cloud, no one cares about your software license. That is one of the most liberating--and frustrating--things about cloud computing.

Depending on your perspective, it either opens up computing or closes it off. Customers don't seem to care one way or another, happily shoveling data into cloud services like Google, Facebook, and others without (yet) wondering what will happen when they want to leave.

Cloud computing may just be the Hotel California of technology.

I say this because even for companies, like Google, that articulate open-data policies, the cloud is still largely a one-way road into Web services, with closed data networks making it difficult to impossible to move data into competing services. Ever tried getting your Facebook data into, say, MySpace? Good luck with that. Social networks aren't very social with one other, as recently noted on the Autonomo.us mailing list.

For the freedom-inclined among us, this is cause for concern. For the capitalists, it's just like Software 1.0 all over again, with fat profits waiting to be had.

The great irony, of course, is that it's all built with open source.

In this cloud computing/Web 2.0 world, infrastructure needs to be cheap, flexible, and plentiful. Open source delivers all three.

Hence, we've seen companies like MySpace tripping all over themselves to open up parts of their platforms in order to make themselves more appealing to developers. As ReadWriteWeb wrote of Facebook back in 2007, however, such developer outreach has not opened up these Web platforms in the sense of providing useful off-ramps to services like Twitter, Digg, Facebook, etc. It has simply created more on-ramps.

Cue the nefarious Microsoft theme song.

Rather than wringing our hands over this, I think there's an opportunity to create amazing amounts of good (and wealth) in this open/closed Web. Frankly, the longer we're in this, the less it's going to matter whether the code is open or closed because, as Tim O'Reilly has been saying for years, data is the heart of the Web, and even open data isn't going to hurt a successful vendor's network effects.

Take Google Trader, an interesting new SMS application that helps people buy and sell goods through text messaging. As The Economist notes, however, one of Google Trader's most interesting applications is in helping to foster free markets in emerging economies:

Lastly there is Google Trader, a text-based system that matches buyers and sellers of agricultural produce and commodities. Sellers send a message to say where they are and what they have to offer, which will be available to potential buyers within 30km for seven days. Mr Makawa says his father used the service to look for a buyer for some pigs, which he sold to pay school fees. These services cost 110 shillings ($0.05) a time, the same as a standard text message, except for Google Trader, which costs double that. In their first five weeks the services received a total of more than 1m queries.

I'm not familiar with the economics of SMS, but I'm guessing that Google gets a cut of the messages its application generates. The more useful Google Trader becomes, the more SMS it generates, the more commissions Google collects.

For the entrepreneurs using Google's service, they could possibly care less whether Google Trader is open source, but Google might. Open the source (and the API to the service), and let a thousand add-on development projects bloom. The more useful and feature-rich the Trader application, the more SMS, the more...you get the picture.

The key is to create an open Web platform, one into which a diverse array of mobile software services can tie. This is one reason Google is such an advocate for open source. Android and other projects bring more people to the Web, a Web that Google monetizes through proprietary services like AdWords.

The community is critical to building upon the platform, but the money is in control of the platform and provisioning of services therefrom.

Just ask Amazon.com. According to ZDNet, Amazon's Elastic Compute Cloud (EC2) service makes roughly $220 million per year. That's a lot of cash, and is a function of EC2 sitting at the heart of a growing developer community, one that builds upon Amazon's open APIs to the service.

Some companies like Cloudera and Red Hat will make piles of cash providing the infrastructure for this cloud-computing gold rush. But the biggest money of all will be those that can build platforms in the cloud, platforms that depend upon open source but which aren't open in the traditional open-source license sense of the word.

That traditional licensing world is dead. Open-source licensing has become an on-ramp to closed data services, hardly what its creators envisaged. In fact, proprietary cloud vendors are almost certainly going to become the biggest cheerleaders for open source, because it means more developers creating more on-ramps to the cloud.

Even if such providers create effective exits, it's unlikely that consumers and businesses will actively use them...

...just like in the Software 1.0 world.

Follow me on Twitter @mjasay.