What is the value of Open Source? First results of the Commission’s study

16 December 2020

Author: Paula Grzegorzewska

This story was originally published in the article for the Open Source Observatory (OSOR), a European Commission’s project aiming at providing trustworthy FOSS expertise and information, as well as connecting European Public Administrations with other relevant stakeholders. OFE is a regular contributor to the Observatory.

The first results of the study on the impact of Open Source Software and Open Source Hardware conducted for the European Commission were first presented in November 2020. It found that increasing the number of commits to Open Source projects would translate to a boost of over €95 billion per year to the EU’s GDP.

The final report will be available at the beginning of 2021, but the consortium consisting of Fraunhofer ISI and OpenForum Europe presented preliminary takeaways on the economic impact of Open Source in Europe at the “Europe’s Digital Decade: Empowered by Open Source” event on 5 November. As Manuel Mateo Goyet, the Deputy Head of Unit – Cloud and Software at the European Commission highlighted during the event, Open Source together with reinforcing Europe’s cloud computing capacity can significantly contribute to increasing competition and innovation in the European Union and this research is a significant step towards finding the best path to achieve these goals. All presented data is available here.The research methodology uses data available on GitHub, the largest Open Source Software platform with over 260.000 European contributors.

The study found that Open Source Software contributes significantly to the EU’s economy – a 10% increase in the number of commits (individual changes in a software project) from 2017 to 2018 translated into a 0.4% growth of the European GDP which equals to €63 billion per year. Moreover, a 10% increase in the number of contributors would raise the European Union’s GDP by 0,6%, to around €95 billion per year. Yet, as the analysis discovered, the most significant advantages of Open Source are not necessarily related to cost-saving or returns on investment – those are rather Open Standards and interoperability together with the independence from proprietary vendors.

Many SMEs are contributing to Open Source developments, as more than 75% of involved companies had below 100 employees. An interesting find is that the smaller the company, the more active it was in its software contributions. The consortium is also carrying out a survey of software development companies and so far the results show that the most important benefits they see in Open Source are finding solutions to technical issues and knowledge seeking, which point to the innovative potential of Open Source developments.

However, no benefits come without costs, and as surveyed companies point out, the biggest financial issues for them are related to ensuring software stability and high labour costs of skilled workers. Not much research data is available on Open Source Hardware due to the relative immaturity of the ecosystem, but the final report will put forward a more detailed analysis based on singular case studies of selected significant Open Source Hardware projects, such as RISC-V and Arduino.

On the policy side, the study team concluded that many governments have introduced different measures to support Open Source Software developments, but their implementation is lacking in many regions. The level of detail of a given legal text is less important than the overall ‘openness culture’ (Open- Source/data/innovation/government) for a positive outcome.

These results shed some light on the economic and social impact of Open Source as well as related policy initiatives, as no similar analysis has been done in the recent years. The recent Open Source Software Strategy 2020-2023 highlights the importance of supporting the Open Source ecosystem and this study might contribute to future inclusion of Open Source in broader policy debates.