SaaS ≠ Safe: The Open-Source Software Compliance Risks Lurking in Your Dependencies

The Myth of Safety in the Cloud

There’s a persistent myth in software development—especially in SaaS companies—that using open-source software internally shields you from compliance risks. After all, if you’re not distributing software, how could license obligations apply? The reality is more nuanced, and increasingly risky as software supply chains grow more complex and licensing enforcement becomes more aggressive.

What You Use Might Still Be "Distributed"

Many teams assume that because their application runs on the cloud and users never download code, they’re in the clear. But that assumption overlooks key obligations in licenses like the AGPL, or the potential for embedded components to end up in client-facing features through APIs, SDKs, or downloadable artifacts.

Compliance Is Now a Business Priority

It also ignores a growing trend: compliance is no longer just a legal safeguard—it’s a due diligence item in funding, M&A, and customer procurement processes. In other words, the risks aren’t just legal—they’re strategic. A mismanaged dependency or an unclear license trail can delay a deal, raise red flags during audits, or even trigger retroactive licensing costs.

Understanding License Scope in SaaS

Compliance for SaaS companies means understanding not only what licenses you're using, but how that use aligns with the license’s scope. Licenses like the GPL or AGPL treat network interactions as a form of distribution. If your product integrates AGPL-licensed code—even indirectly—you may be required to offer source code to your users. Likewise, if your backend includes GPL-covered libraries, and those libraries affect how your app functions or what’s exposed to customers, you could fall under distribution obligations.

Don't Ignore the "New Licenses"

Some cloud providers and tool vendors have started including custom licenses like SSPL or the Elastic License, which aren’t OSI-approved and carry their own restrictions. Misinterpreting these as permissive licenses can lead to violations—even if unintentionally.

Tools Help, but Governance Matters More

And while the legal risks are real, the operational burden is just as important. Engineering teams often struggle to maintain a current inventory of dependencies and their licenses. Tooling helps—SPDX, OpenChain, and software composition analysis platforms are a step forward—but they’re not enough on their own. Governance and awareness need to be built into the development lifecycle.

Build Compliance Into the Workflow

Treating compliance as a post-release activity or something for the legal team to “figure out later” is a recipe for trouble. Instead, high-functioning teams treat OSS compliance like security: a shared responsibility that starts at design and continues through release and maintenance.

Conclusion: SaaS Doesn’t Mean Exempt

SaaS products are software too. And while distribution may look different in the cloud era, license obligations haven’t disappeared—they’ve just shifted. By recognizing this and embedding compliance early, SaaS companies can reduce risk, avoid surprises in critical business moments, and build trust with customers who are increasingly asking: “What’s inside your stack?”

Note: The preceding text is provided for informational purposes only and does not constitute legal nor business advice. The views expressed in the text are solely those of the writer and do not necessarily represent the views of any organization or entity.

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