Is Terraform Still Open Source?

Disclosure. Scalr was a founding contributor to OpenTofu and supports both engines, so we have a commercial interest here. What follows sticks to what the license files actually say, and you can read both of them yourself in a couple of minutes.

Is Terraform still open source?

No. Terraform 1.6.0 and every release since ship under the Business Source License 1.1, which is source-available: you can read and modify the code, but the license carves out a class of commercial use. Terraform 1.5.7 was the last release under the Mozilla Public License 2.0. That is the version OpenTofu forked from, and the reason a surprising amount of tooling still pins to it.

The original change landed on August 10, 2023, when HashiCorp moved all of its products to BUSL. What has shifted since then is who holds the license.

Which Terraform versions are still open source?

The 1.5.x line and everything before it. Terraform's LICENSE file names the Licensed Work as "Terraform Version 1.6.0 or later", which means the restriction starts at 1.6.0 and does not reach backwards. This is the detail most write-ups get wrong: you will see the cutoff quoted as 1.5.5, or as "all versions from August 2023", and neither matches the file.

Who holds Terraform's license now?

IBM. The LICENSE file lists the Licensor as "International Business Machines Corporation (IBM)" and the Licensed Work as "(c) 2024 IBM Corp", following IBM's acquisition of HashiCorp. The terms did not change when the ownership did, but the name on the file did, so any policy document or vendor questionnaire of yours that says "HashiCorp's BUSL" is now describing the wrong party.

What does the license actually restrict?

Less than the reaction to it suggested. The Additional Use Grant permits production use, and it excludes from that permission only the case where you offer the Licensed Work "to third parties on a hosted or embedded basis in order to compete with IBM Corp.'s paid version(s)". A competing offering is defined as software sold to third parties that significantly overlaps IBM's commercial versions. Internal organizational use is called out as not competitive.

So if you are a platform team running Terraform in your own CI against your own accounts, this is a non-event in practice. Two situations are where it starts to bite:

1. Your product runs Terraform on behalf of your own customers. That is the case the grant is written to exclude, and it needs a lawyer rather than a blog post.
2. Procurement or legal asks whether your infrastructure tooling is open source, and answers that question against the Open Source Initiative's approved list. BUSL is not on it. This comes up most often in public sector and regulated environments, where the answer has to be defensible on paper rather than reasonable in spirit.

There is also an expiry that gets forgotten. BUSL 1.1 sets a Change Date of four years from each version's publication and a Change License of MPL 2.0, so releases convert to MPL on a rolling basis instead of the restriction hanging over the project permanently.

What are your options if you need an open-source engine?

Three, in rough order of how much work they are.

Stay on Terraform 1.5.7. It is MPL, it still works, and it receives no fixes. Plenty of teams did this in 2023 and are still there, which is a slower decision than it looks: you are validating your configuration against a frozen engine while providers keep moving.

Move to OpenTofu. It forked from 1.5.7 under MPL 2.0, sits under the Linux Foundation, and has kept a steady release cadence since. If you are on Terraform 1.5.x the switch is close to a no-op, and our OpenTofu vs Terraform comparison covers what genuinely differs between the two engines after nearly three years apart. The what is OpenTofu guide has the migration playbook.

Accept BUSL and stay current. For most internal platform teams this is a defensible choice, and pretending otherwise would be dishonest. The license permits what you are doing. You are betting that your company never ends up in the excluded category and that the OSI question never reaches you in writing.

Does this change anything for Scalr customers?

Not in a way that requires action from you, though the engine question is worth a look. Scalr supports Terraform through its last MPL release, 1.5.7, and uses OpenTofu for anything newer, so a Scalr workspace never runs a BUSL-licensed binary. Each workspace picks its engine independently, which means you can move a pilot workspace to OpenTofu and leave the rest alone while you decide.

Scalr's pricing does not change with the engine either: the same per-run meter applies whether a workspace runs Terraform 1.5.7 or current OpenTofu. If you want the fuller picture of what a platform layer needs to do once you are running a mixed fleet of engines, what an OpenTofu management platform actually covers works through it. Governance is the part teams underestimate: once both engines are in play, the version string no longer tells you which binary ran, so the engine becomes something your policies have to read directly.