Strict licensing of emerging technologies is often self-defeating, slowing adoption and inviting competitors to outpace you. In early stages, value lies in network effects, developer engagement, and iterative improvement, not raw technical advantage. Licensing throttles these dynamics by limiting who can use or build on your technology, reducing the combinatorial value that comes from broad participation. This pushes others to create open alternatives, making the originator irrelevant.
Philosophically, this reflects Metcalfe's Law, which applies beyond social networks: value scales with the number of participants, whether they are devices, apps, or developers. It also illustrates Schumpeterian Creative Destruction, which argues that markets advance through waves of innovation that dismantle incumbents. When firms try to protect a fragile lead with legal barriers rather than innovation, they often create space for rivals to bypass them entirely, leapfrogging with superior, more accessible designs. History shows that "creative destruction" punishes firms that cling to scarcity and control, rewarding those who embrace iteration and openness. Open innovation theory further reinforces this, showing breakthroughs thrive in porous, collaborative environments.
History supports this:
-IBM's open PC architecture enabled widespread cloning and adoption, while Apple's closed Mac stayed niche.
-Sony's Betamax licensing drove manufacturers to adopt VHS, which dominated despite weaker specs.
-Tesla's open patents accelerated EV infrastructure and cemented its leadership.
-QWERTY vs. Dvorak demonstrates that openness and early adoption can outweigh technical merit.
Restrictive control signals scarcity thinking and isolates companies. Openness builds ecosystems, standards, and staying power, while licensing walls create space for faster, more accessible alternatives. For a firm hoping to shape a market, early openness is a strategic advantage, not a concession. Charles Strauss called it.