Digital Sovereignty and the Role of Free / Open Source Software

With the election of Donald Trump, people in Europe realized how much they are dependent on US tech giants. Thus, there is now an initiative to move towards »Digital Sovereignty.« This is good, but it should have happened much earlier. The advantages of Free Software / Open Source were always there, and many people have pointed them out. Already 20 years ago, we were fighting against software patents in Europe (which would have been devastating for Open Source software and which would have increased the power of tech corporations even more). Then, after the revelations of Edward Snowden (2013), there would have been even more good reasons to switch to Free / Open Source software, as we now know how much the US is using the tech giants to spy on us.

But here we are in 2026. So, better late than never.

While Free / Open Source software is a cornerstone of Digital Sovereignty, it also has a lot more advantages. It not only brings »sovereignty« for Europe but sovereignty for customers (both private and corporate). It brings independence and digital self-determination for all of us.

In order to really understand this, one needs to understand how the IT business (and the commercial software business in particular) really works*

The Economics of Software

If you look at the manufacturing costs of most software (that is mostly the labour costs), then you find that the prices of software are usually one, two, or even three orders of magnitude higher than the production costs. So there is a 1,000% or 10,000% profit margin. In the end, someone has to pay for the yachts of Larry Ellison (Oracle), just to name one example. (Where the yacht does not hurt us that much, the fact that he also buys political influence and finances fascist politics is more concerning.)

Having such high profit margins seems unusual. How can this work? Well, software always tends towards a monopoly. There are two factors that play a key role here

1.) Zero marginal costs: Once software is developed, it can be given away for any price. In case a competitor is on the horizon, the company with the »market leader« status can easily crush them. After all, their software has already been developed and paid for, and they can lower costs to drive out competitors.

2.) Vendor Lock-In: Due to its complexity, software already has a much higher tendency towards »lock-in.« Once you use a certain software to, e.g., create documents, you are dependent on this software in order to open your own documents. Or, once you have trained your team to use a certain software, their know-how would become obsolete when you switch to something else, etc. While these lock-in effects are there, commercial software vendors are usually very skilled in maximizing these (e.g., Microsoft had to be forced by lawsuits to document the protocol specifications of their mail servers, the »Exchange-Wire protocol«). There are a lot of more or less subtle ways to increase the »lock-in.«

In the end, the mechanism that determines the price of software is comparable to how hijackers determine the ransom for a hostage. The question to ask is: how much is the customer willing to pay because switching to an alternative product would be so painful? And of course, one of the considerations there is: how much money do they have? E.g., companies give out their product to schools and education for a low price: they are happy that these will get the children hooked on their product. It is also a bit like the sales paradigm of the drug dealer: the first shot is free.

Why Open Source is the Better Choice

So, when it comes to the question of what can be done in order to foster Free / Open Source software, a key element is the question of how to avoid the lock-in mechanisms.

The huge margins that commercial software has, of course, are paid by European consumers and European companies. But the monetary costs are not even the biggest problem. As has been already mentioned: with commercial, closed-source software, there is always the risk that hidden surveillance and back-doors are present. Due to the lock-in, there is also less flexibility to change software and, as software is a main component of many business processes, also less flexibility for the business. Free / Open Source software can be much more easily and quickly used and adopted. (E.g., Google would not have been able to build their search empire without the availability of Linux.)

Commercial software is also often lower quality. As the vendors understand that the customer has little choice in switching to an alternative, they are often lazy in fixing bugs or implementing useful features, and customers just have to put up with this.

The development of Free / Open Source software allows software development costs to be shared among many users and companies, but without giving absolute control over the software to only one company. We have an »economy of scale« without monopoly control.

There needs to be a special focus on AI. Here, we are still in the early stages, and it should be possible to steer the future in the direction of »Open Source / Open Weights AI.«

So, from a purely liberal-market economy point of view: Free / Open Source software is a much better choice. Of course, this also points towards the fact that cooperation is much more efficient than capitalist competition. As our society has already transitioned towards a »knowledge society,« this model of cooperative production is much more adequate, and capitalism is already past its expiry date.

Concrete Measures for the EU

So, when it comes to the concrete measures that the EU could provide to foster Open Source and our »Digital Sovereignty,« we need to focus on the above-mentioned »lock-in« effects. Here is a list of concrete measures:

  • Education: As »know-how« is an important factor in the lock-in mechanism, Free / Open Source software must be made mandatory in education.
  • Public Sector: The EU administration itself, federal and local governments, and all public sectors shall be compelled to switch to Free / Open Source software as much as possible. (Often such software already exists, and in other cases, it must be developed. Due to the mentioned lock-in effects, the switch can sometimes be painful and also somewhat expensive, but will save costs in the medium and long-term.)
  • Critical Infrastructure: Mandatory use of Open Source (the EU should also mandate the use of Open Source software in critical infrastructure, also when operated by private companies) to increase resilience, security, and sovereignty.
  • Tax Advantages: If a company switches to Open Source (and thus also potentially contributes to that software), that should be rewarded by lower taxes. Also, companies that provide support for Free / Open Source software should be treated as companies that work for the common good and should have tax benefits.
  • Higher Taxes on Closed-Source: On the other side, it would be good to have higher taxes on closed-source, commercial software. This money can then be used to finance the development of key Open Source projects.
  • Open Weights: Large LLM systems were trained with the entirety of human knowledge. It is therefore logical to demand that the »weights/parameters« in which this knowledge is stored in AI systems must also belong to all of humanity. Large AI systems should therefore always be »Open Source and Open Weight.« Consequently, it is necessary to explicitly exempt this area from the protection of (almost always extremely questionable) so-called »intellectual property rights.« Human knowledge must belong to us all.
  • Incubator Projects: Often, only small projects would be needed to help get an »Open Source Ecosystem« kick-started. The EU and national governments should therefore help to finance key projects. A handful of developers can already produce a lot.
  • Legal Protections: Fight against software patents and other ways where the legal system is set up to give advantage to tech giants. (While the EU rejected software patents in 2004/2005, the EU also helped to create the »Unified Patent Court,« where there is the danger that software patents are reintroduced. It is a big scandal that the EU helped to create a legislative body that is outside the legal control of the EU!)
  • Open Standards: Enforce the use of Open Standards. Open standards reduce the potential of »lock-in.« But Open Standards are not enough: no specification for a standard must be allowed to become »standard« unless there is a good and well-maintained Free / Open Source reference implementation. The EU must play an important role here within the bodies of international standards organizations (like IEEE, etc.).

Digital Sovereignty in the Era of Cloud Computing

The trend towards cloud computing needs a few special considerations regarding digital sovereignty:

If your software does not run on your own hardware and your data is not stored on your own servers, we have an additional dependency. So, European companies and organizations should make sure to carefully consider where the cloud really makes sense. While the cloud allows some flexibility (e.g., setting up a new service within hours or minutes without the need to order new hardware), there are usually no cost savings for long-term workloads.

Dependency on the cloud provider is even higher when higher-level services are consumed (PaaS and SaaS). So, in order to keep a high degree of digital sovereignty:

  • Avoid PaaS and SaaS and only use IaaS: On IaaS, only Free / Open Source software should be used. This would help to change cloud providers later or to bring back workloads on-premises.
  • License Preferences: As cloud providers can use Open Source without contributing to it, there should be a preference for Open Source licenses that mandate the availability of source code for online services (e.g., AGPL – GNU Affero General Public License).
  • European Infrastructure: Europe should build its own cloud offerings based on Free Software / Open Source.

  • The Problem with US-Owned Subsidiaries: Using a US cloud provider who promises to host in Europe and only operate with European personnel is not enough as long as all of their software stack is directly dependent on the closed-source, US-based parent company.

  • Franz Schäfer (Mond) schaefer@mond.at

This text was submitted to the EU Consultation "The European Open Digital Ecosystem Strategy" link to submission on EU website

Also see: submission by GPA which i was involved in drafting.