Understanding the Terraform Licensing Model
The Terraform licensing model changed the way infrastructure automation is built, shipped, and maintained. One decision reshaped the open source narrative around Infrastructure as Code: HashiCorp moved Terraform from MPL 2.0 to the Business Source License (BSL). For teams running production pipelines, this shift is not just legal semantics. It defines what you can run, modify, and distribute under the Terraform name.
Under MPL 2.0, Terraform’s source was open for commercial use with minimal restrictions. Forks were common, and vendors built integrations without worrying about licensing friction. The Business Source License changes that. The code is still visible, but use in competitive products is now restricted. If your platform delivers Terraform as a service, or wraps it into a commercial offer, the legal terrain is different.
HashiCorp’s official stance is clear: individual and non-competing commercial use remains free. But “competing” is a wide term. Providers and modules still run without issue, but any feature that mirrors Terraform Cloud or Enterprise could trigger BSL terms. This forces teams to either adapt workflows to the license or migrate to a fork. The most prominent fork is OpenTF, which preserves MPL licensing and aims for continued community governance.
From an engineering standpoint, the licensing model impacts CI/CD pipelines, compliance reviews, and vendor selection. If you deploy Terraform through automation, verify whether your use case crosses BSL thresholds. If it does, you need a commercial agreement or a migration plan. The decision between official Terraform and an open fork is now a strategic one, blending technical fit with licensing risk.
Understanding the Terraform licensing model is not optional anymore. It is a dependency in your architecture, as critical as state management or provider support. Map your usage, check your contracts, and plan for license compliance before it breaks production.
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