Broadcom and VMware, Stack Overflow and OpenAI | 🎙️#37
Will the VMware acquisition affect your company? Is there a problem with Stack Overflow partnering with OpenAI? Join Leo, Pablo and Kirill in a discussion of all the recent DevOps, Cloud and AI controversies.
- What’s the deal with Broadcom acquisition of VMware?
- What do Google and AWS think about it?
- What’s up with Stack Overflow partnering with OpenAI?
- The power of community vs. the power of a company;
- What is a healthy relationship with content you produce for another platform?
You can listen to episode 37 of DevOps Accents on Spotify, or right now:
Broadcom and VMware
The recent acquisition of VMware by Broadcom has sent ripples through the tech world, raising significant concerns and discussions among industry experts. This move marks another chapter in Broadcom's history of controversial acquisitions. With a track record of buying companies and then aggressively cutting costs, Broadcom's takeover of VMware is poised to reshape the landscape of cloud computing.
This particular transaction required approval from numerous organizations. Initially, the United States had to authorize it, followed by China, and similarly, the European Commission did the same. The reason for this extensive approval process is due to the widespread use of VMware. VMware is not only utilized in the USA; it is also popular in Europe, China, and many other places globally. The issue arises because while you can acquire a company, you cannot simply dismantle it if it has a large user base.
Consider the scenario where VMware had 28,000 partners worldwide, indicating a significant global impact. These partners were distributing VMware products internationally. Eventually, Broadcom completed the purchase of VMware. However, issues arose when the CEO and board of Broadcom decided to shift the company's strategy. Typically, acquiring a company implies improvements or changes are needed because the new management believes they can operate more effectively.
Broadcom intended to streamline VMware's product lines from nearly 200 to just two or three main offerings. They planned to modify licensing agreements, which caused considerable concern among existing customers. Many customers, including businesses, schools, and universities, had previously purchased perpetual licenses. A perpetual license means that as long as they use VMware, they retain the license for the product indefinitely.
Despite the stability and consistency these licenses offered, including regular updates and security patches, Broadcom decided to phase out all perpetual licenses. Customers with these licenses received an email giving them only six weeks' notice that their licenses were no longer valid. The legality of this move was beyond my expertise, but it led to significant changes in licensing terms. For instance, many organizations, including universities and nonprofits, reported that the cost of their licenses increased three to four times in just six weeks.
If customers did not transition to the new licensing model, they were left without any support, except for critical updates in case of zero-day vulnerabilities. Essentially, they were left to fend for themselves, highlighting the core problem that everything operated smoothly until Broadcom acquired the company and changed everything. — Pablo Inigo Sanchez
Google's and AWS's Reaction
Kirill shared insights on how major cloud providers like Google and AWS are reacting to this acquisition. Both companies are keenly observing the situation, aware that Broadcom's integration of VMware could disrupt the market dynamics. While Google and AWS are not immediately threatened, they recognize the potential shifts in competitive strategies. Kirill emphasized that these giants are preparing to adapt to any changes that may arise from Broadcom's business decisions.
The strategic decisions of major cloud providers like Google and Amazon AWS reflect differing approaches to VMware integration. Google, recognizing the widespread use of VMware in corporate environments, has opted to support VMware on its Google Cloud platform. This support facilitates "lift and shift" migrations, allowing organizations to move their existing VMware-based systems directly into the cloud without significant alteration. Essentially, organizations can run their VMware environments directly on Google Cloud, maintaining their established operational frameworks while leveraging cloud scalability.
In contrast, Amazon AWS has taken a different stance with its VMware integration. While AWS initially supported VMware through services like AWS VMware Service—allowing users to run VMware environments within AWS data centers—they are increasingly encouraging customers to transition away from VMware. AWS advocates for migration to its native EC2 (Elastic Compute Cloud) service, which has evolved from being Xen-based to a fully in-house developed solution. This shift reflects Amazon's strategy to streamline cloud operations under its proprietary technology, thereby simplifying the ecosystem and potentially reducing complexities associated with supporting third-party platforms like VMware.
Amazon's approach is more direct: instead of maintaining parallel services that support VMware, they promote a full transition to AWS native services, suggesting a focus on integrating customers into their fully controlled environment. This strategy could appeal to businesses looking for a more seamless and integrated cloud experience, though it requires them to adapt their existing infrastructures to AWS's specific technologies.
In my opinion, it's not beneficial for VMware and Broadcom to have VMware integrated within AWS. The primary reason is that Amazon will likely attempt to transition users from the VMware layer to AWS native services. Therefore, they might not be particularly concerned if Amazon decides to discontinue offering VMware. — Kirill Shirinkin
Migration Challenges for Companies
Pablo highlighted a critical issue faced by companies in the wake of this acquisition: the lack of time to migrate their systems. Broadcom's shift from a perpetual to a subscription-based licensing model for VMware products means businesses must adapt quickly. Many organizations, particularly those with large-scale operations, cannot afford the time and resources required for swift migrations. This sudden change puts immense pressure on companies, forcing them to either comply with the new licensing terms or find alternative solutions.
For smaller companies, the impact of VMware's licensing changes is less severe because they may only have about three VMware hosts. In such cases, the license costs are in the thousands rather than millions of dollars. So, even if the costs triple, it's painful but not as financially crippling.
However, a recent news piece highlighted a significant issue faced by larger entities. A European consortium of data center vendors—essentially a council or group within the industry—publicly criticized VMware's pricing increases. These vendors, who operate data centers with thousands of servers and machines relying on VMware, are facing potential monthly operating cost increases in the millions.
This situation isn't just problematic for the data centers themselves, who resell compute capacity to other businesses. The increased costs of running a virtual machine—from $3 to $10 per month—necessitate hiking up prices for all their customers. In some instances, it was reported that costs escalated tenfold, from $3 to $30 per month. Consequently, every client of the data center, including potentially 200 startups and mid-sized companies, would see their expenses rise as well.
This creates a domino effect: the foundational computing layer becomes more expensive due to the software license change, impacting everyone dependent on these services. In such cases, companies might have no other option but to pass these costs on to their customers or consider legal action against the licensing changes. This underscores the broader impact of VMware's pricing strategy on the industry, particularly affecting those at the foundational level of digital infrastructure. — Kirill Shirinkin
### Stack Overflow's Partnership with OpenAI: A Controversial Move
Stack Overflow's recent partnership with OpenAI has sparked a heated debate within the developer community. The collaboration involves allowing OpenAI to train its models using user-generated content from Stack Overflow, a decision made without seeking explicit permission from the platform's user base.
Another company that had a challenging week was Stack Overflow. They recently announced a partnership with OpenAI, a move that stirred quite a bit of controversy. Essentially, Stack Overflow is now allowing OpenAI to train its AI models using the vast array of user-generated content on their platform. This decision was made without seeking explicit permission from its user base, which, unsurprisingly, did not go over well. In response, many users began deleting their contributions. This led to a wave of bans from Stack Overflow for those trying to prevent their data from being used to train AI models.
It’s a peculiar situation. On one hand, Stack Overflow is banning the use of AI-generated content like ChatGPT, which they announced about a year ago. They banned AI-generated content in replies because they wanted to maintain the authenticity of the platform, ensuring that only real users contribute. On the other hand, they are feeding existing user data into the OpenAI model to train it. This creates an interesting dichotomy. The core of this issue ties back to their new business strategy. — Leo Suschev
The Power of Community
Leo commented on the power of community, highlighting the incredible value that user-generated content brings to platforms like Stack Overflow. He stressed that communities can achieve remarkable things when they work together, contributing knowledge and support to each other. However, this partnership has put a strain on the trust between Stack Overflow and its community.
This partnership indeed has broader implications. Over the years, AI companies, including OpenAI, have utilized publicly available data from platforms like Stack Overflow to train their models, often without direct compensation—probably never compensating anyone. Stack Overflow has now started charging these AI companies for accessing their data. This shift could hint at a possible desperation to monetize assets as the traffic to Stack Overflow is declining while traffic to platforms like GitLab is increasing.
According to recent data, there might have been discussions between the CEO of Stack Overflow and the CEO of OpenAI about using Stack Overflow’s data in a financial agreement to compensate for the extensive use of the data and resources that were generated over the years. This raises questions about the future of Stack Overflow and similar platforms. Should these platforms be prepared to adapt to the new AI-driven ecosystems, or is this a sign of declining relevance? It’s crucial to consider how platforms will navigate the evolving landscape of technology and user engagement. — Leo Suschev
Stack Overflow: Company vs. Community
Pablo pointed out a crucial distinction: Stack Overflow is a company, not just a community. While it relies on user-generated content, it operates with business objectives and strategies. This move to partner with OpenAI and monetize user data underscores the company's need to sustain itself financially, even if it means making decisions that might upset its user base.
We need to consider that Stack Overflow was created as a tool because Google wasn't adept at answering certain types of questions. Normally, when you searched Google for a technical question, it would direct you to a blog rather than providing a direct answer. The advantage of Stack Overflow was that anyone could go there to write an answer or ask a question. The community was incredibly active, and I can't count how many times I've consulted Stack Overflow myself. But what's happened over the past year is a shift since the introduction of ChatGPT. The problem for Stack Overflow is that daily usage is declining because more people are turning to AI tools like ChatGPT for generating code and answers. Consequently, Stack Overflow is being used less, which poses a problem for them.
Ultimately, they need to find ways to generate revenue. If fewer people visit the site, ad clicks decrease, which in turn affects their ability to generate enough money to pay their employees. So, if you need to "deal with the devil," so to speak, to resolve your financial issues and secure employee salaries, it might be seen as a necessary step. In this context, partnering with companies like OpenAI could be a smart move to ensure financial stability and continue supporting the community. — Pablo Inigo Sanchez
The Risks of Storing Content on Third-Party Platforms
Kirill's remarks brought attention to the broader issue of storing content on third-party platforms. He emphasized that users often forget that their contributions on platforms like Stack Overflow are effectively owned by the company. This means that the platform can decide how to use and monetize that content. Kirill's point serves as a reminder of the risks involved in contributing valuable content to platforms that can change their policies or partnerships without user consent.
I don't want to say that people who start deleting their own content are stupid, but ultimately, this is how the internet functions. You intentionally gave your content to a platform. This is precisely why you shouldn't use Medium as the only place to post your articles; once you do, they belong to another platform. Therefore, you should always have your own website to post your content, and then perhaps cross-post to other platforms. In this case, people provided good answers for free, willingly. Now, it has been stated that these answers will be used to develop the next generation of tools to better assist developers in navigating the complexities of their work. It's a bit ridiculous, right? The original reason many people posted on Stack Overflow was to help others, and also because it's beneficial for their CV. But primarily, it's about helping others. Now, there's a new generation of tools that will be even more effective at helping. Yet, people don't want their content used for this purpose, which makes no sense. If you wanted to retain ownership of the content you posted, you shouldn't have posted it on a platform owned by another company in the first place. Just buy a domain, start a WordPress site, and post there. Google will still discover it and index it for AI usage. — Kirill Shirinkin
Navigating the Future
As the tech industry continues to evolve, these developments highlight the need for both companies and users to adapt. Broadcom's acquisition of VMware and Stack Overflow's partnership with OpenAI are just two examples of how business decisions can significantly impact the broader community. Companies must balance their financial goals with the trust and support of their users, while users must remain vigilant and informed about the platforms they rely on.
In this rapidly changing landscape, it is crucial for businesses and individuals alike to stay informed and adaptable. Whether it's dealing with sudden changes in licensing models or understanding the implications of new partnerships, the key to navigating the future lies in being prepared and proactive.
Show Notes:
- Paul’s new AI article;
- Pablo about VMware acquisition;
- A press release on the situation;
- Stack Overflow and OpenAI.
Podcast editing: Mila Jones / milajonesproduction@gmail.com