In 2023, HashiCorp made it to the news by changing the Terraform license, a tool that is popularly used for infrastructure. They moved from their previous Mozilla Public License v2.0 (MPL) to the Business Source License (BSL). This licensing shift raised serious concerns among the tool users and other competing platforms.
The Terraform license change was mainly due to protect its commercial interests, but multiple users were questioning the effect that it would have had on their usage. Users were found worrying about things, such as:
“What would it mean for me? Should I continue using the tool or move towards alternatives?”
These questions caused a stir and people were left looking for Terraform alternatives left, right, and center.
Even now, after almost 2 years, people are still confused as to what they should do. Therefore, in this article we shall talk about the change, why it matters, the impact that it has had in the past two years, and what alternatives you can switch to.
Why HashiCorp Changed Terraform’s License
In August 2023, HashiCorp moved from the open-source Mozilla Public License v2.0 (MPL) to the Business Source License v1.1 (BSL). This move was largely driven by HashiCorp’s concern about the commercial vendors using Terraform code to build competing platforms or services without contributing back to the ecosystem.
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In an official statement, HashiCorp co-founder, Armon Dadgar said:
“As a result, we believe commercial open source models need to evolve for the ecosystem to continue providing open, freely available software. Open source has reduced the barrier to copying innovation and selling it through existing distribution channels. Many vendors have shifted increasingly to closed source for this reason, however we did not feel that would preserve our original goals in adopting open source.
That is why today we are announcing that HashiCorp is changing its source code license from Mozilla Public License v2.0 (MPL 2.0) to the Business Source License (BSL, also known as BUSL) v1.1 on all future releases of HashiCorp products. HashiCorp APIs, SDKs, and almost all other libraries will remain MPL 2.0.” (Source)
In essence, they meant that even though we support community innovation, some vendors were taking unfair advantage of the open source community, which was causing a hindrance in their commercial offerings.
What Is the New Terraform License?
Terraform has now moved under the Business Source License v1.1 (BSL), which is a source-available model developed by MariaDB. It allows the code to remain visible and usable but with some limitations.
Key points about the BSL license:
- Source-available, not open source: BSL is not approved by the Open Source Initiative (OSI), so Terraform is no longer considered truly open source.
- Usage restrictions: You can use Terraform freely except for offering it as a “competitive hosted service”—i.e., you can’t use it to build and sell a Terraform-based SaaS without a commercial agreement.
- Change delay clause: After a set period (typically four years), the code automatically reverts to a permissive open-source license (often MPL or Apache 2.0).
- Applies only to HashiCorp-managed repos: Community forks (like OpenTF) that existed before the license change can remain under MPL 2.0.
Impact on Users & Open Source Community
The Terraform license change has significantly impacted the DevOps and cloud-native world, mainly the developers, tool providers, and infrastructure teams that rely on Terraform in production.
- Enterprise Concerns
Enterprises that embed Terraform and use it in a “competitive” manner are now at a legal risk. Legal and procurement teams have had to reassess compliance, which slows down the infrastructure operations and creates uncertainty.
- Open Source Backlash
Terraform was previously highly regarded in the open-source community within the IaC ecosystem. The shift away from OSI-approved licensing has alienated the contributors and maintainers and the community feels betrayed.
- Toolchain Disruption
Many DevOps teams were completely dependent on Terraform in the CI/CD pipelines with provisioning scripts and automation frameworks. Due to the new BSL terms, vendors are now confused about whether they should continue using it.
- Forks and Fragmentation
The Terraform license change has led to forks like OpenTF, which aim to keep Terraform truly open-source, creating the perfect fragmented ecosystem that may diverge in the future.
Pulumi’s Response to the Terraform License Change
Pulumi is one of the biggest competitors in the IaC space, which was quite quick to cash in on the controversy. While the Pulumi supports its own proprietary elements, the core lies on an open source license under the Apache 2.0.
How Pulumi positioned itself:
- Pulumi used this opportunity to deliver on their promise to open ecosystems.
- They affirmed again and again that they will not give any surprises related to the licence change.
- They increased their knowledge base by updating guides on how to switch to Pulumi. This helped users migrate seamlessly without any hurdles.
In short, Pulumi used the controversy to convert annoyed Terraform users into their own customers.
OpenTF & Other Community Forks
The most apparent response from the community was the launch of OpenTF, which is a fully open-source fork of Terraform that was created by a coalition of cloud-native companies and contributors. This project was to keep Terraform neutral for all.
Here is the official release from OpenTF;
What is OpenTF?
- Fork of Terraform 1.5.x (the last version under MPL v2.0)
- Licensed under MPL 2.0, ensuring long-term open-source use
- Backed by companies like Spacelift, Env0, and others
- Actively developed under the Linux Foundation as OpenTofu
OpenTF has now changed to OpenTofu, which can be used as a Terraform replacement.
Other forks and efforts:
- Some of the users built their own lightweight forks for personal or educational uses.
- New tools will emerge to bridge Terraform configurations with the backends.
Related Article: OpenTofu vs Terraform: Key Differences, Pros, and Use Cases
Terraform License Change: Reddit/X Community Reactions
Social media community had mixed reactions to the news of Terraform license change. Some people were helping out others by sharing useful information:
Whereas others were more focused on discussing what it would mean for their teams and other similar enterprises.
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Should You Switch from Terraform?
The Terraform licence change does not mean that you must abandon it immediately, but it does mean that you start making some changes on how you use the tool.
When You Might Not Need to Switch:
- You are using Terraform for internal infrastructure and not as a hosting service.
- You don’t have to redistribute or package Terraform with commercial tools.
- You are building a SaaS platform that is completely dependent on Terraform code.
- You are continuing HashiCorp’s official support.
When You Should Consider Switching:
- You want to avoid legal ambiguity.
- You are more inclined towards open source first communities and want to support them.
- You want a fully open ecosystem, like OpenTofu or Pulumi.
Migration Paths to Consider:
- OpenTofu: A community-maintained, open-source fork of Terraform with backward compatibility.
- Pulumi: For teams that want a modern programming language-based IaC approach and multi-cloud support.
- Crossplane: For Kubernetes-native infrastructure management using custom resources and controllers.
Conclusion: How Can You Navigate Through the Terraform License Change?
The HashiCorp Terraform license change definitely does represent a huge shift in how the Infrastructure as Code ecosystem will move forward. However, it does not immediately disrupt most of the users, but it does introduce more legal, ethical, and strategic questions in the future.
Why did HashiCorp change Terraform’s license?
HashiCorp made the switch to prevent other companies from offering Terraform as a commercial service without contributing back, aiming to protect its business model and encourage ecosystem investment.
How does the new Terraform license affect users?
Most open-source users and individual developers can still use Terraform under BSL 1.1 for free. However, companies building competitive commercial offerings on Terraform must comply with stricter rules or seek a commercial license.
What are the alternatives to Terraform after the license change?
Alternatives include Pulumi (multi-language IaC), OpenTofu (an open-source Terraform fork), and tools like Ansible, AWS CDK, or Crossplane depending on your use case.
