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When I was looking some web apps they said our apps are "commercial open source". I understand "open source" but what is "commercial open source" what kind of license they are using?

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"Commercial Open Source" software is released under an Open Source licence and accompanied by additional (and often optional) paid services for people who want them.

Many commercial organisations are built around Open Source software; they give the software itself away and offer paid services in support. For example:

  • Canonical give the Ubuntu OS away under an Open Source licence, but offer paid enterprise and engineering support.
  • Automattic give the WordPress CMS away, but offer paid blog hosting and add-on services.

In both of these cases, the "commercial" part of "commercial open source" is a reference to the add-on services and not the software licence itself. That said, it's important to read, understand, and ask questions about the licences for any products you use.

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Without you saying just who they are I can't tell what license they are using. However it is possible for commercial and open source to go together. Open source means you can see the source code. They could make their money out of supporting the product, or maybe hosting it for you. That's the model that Red Hat use.

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