In 2023, HashiCorp shocked the open-source world by relicensing Terraform under the Business Source License (BSL), triggering an industry-wide backlash. Two years later, the fallout is becoming hard to ignore: Terraform adoption growth has slowed by nearly 19% year-over-year, according to DataDog’s 2025 Cloud Infrastructure Survey, while challengers like Pulumi and OpenTofu are rapidly earning converts.
The controversy isn’t just about code—it’s about control. Enterprises built massive infrastructure stacks on Terraform assuming its open-source model was stable. When HashiCorp pivoted to a more restrictive license, enterprise developers scrambled. The winners are competitors promising freedom, and the losers—at least for now—are both HashiCorp investors, who’ve seen stock volatility spike, and engineers forced to navigate a fragmented tooling ecosystem.
The Data
Here’s what the numbers tell us about the Infrastructure as Code (IaC) showdown:
- Terraform downloads from the HashiCorp registry dropped by 14% in 2024, according to Sonatype’s OSS report, while OpenTofu—an open-source fork supported by the Linux Foundation—saw adoption rates double quarter to quarter across mid-market companies.
- Pulumi announced in Q1 2025 that it surpassed 3,000 enterprise customers, up from just 1,200 in 2023. CEO Joe Duffy claimed Pulumi’s growth has been “accelerated by developers burned by licensing uncertainty.”
- Market impact is visible: HashiCorp’s share price is down 23% year-to-date, even as cloud adoption booms. For context, peers like MongoDB and Snowflake are up double digits.
- Data from RedMonk shows Terraform still dominates, but Pulumi’s usage doubled from 6% to 12% between 2022 and 2025, while OpenTofu, the open-source fork of Terraform, already claims 8% market share in less than 18 months.
- Developer sentiment matters. A 2024 CNCF survey of 4,000 DevOps practitioners found that 48% expressed concern about Terraform’s BSL license, and 30% said they were actively trialing OpenTofu or Pulumi as alternatives.
Here’s the thing: IaC is not glamorous—it’s plumbing. But the plumbing wars matter because every Fortune 500 depends on automation to provision cloud resources. If confidence in a tool erodes, enterprises risk outages, security gaps, and wasted millions navigating migrations they never planned for.
The People
The human side of this story is raw.
“When Terraform went BSL, it felt like a betrayal,” said one senior DevOps engineer at a Fortune 100 retailer. “We bet our entire automation roadmap on Terraform modules. Overnight, executives started asking whether we were locked in. The board didn’t like the answer.”
A former HashiCorp sales director told Forbes: “The company underestimated how ideological developers are about open source. They saw licensing as a financial optimization. In practice, it came off as greed. That narrative is hard to shake.”
On the flip side, Pulumi and OpenTofu insiders want to frame themselves as the new safe harbors. Joe Duffy, Pulumi’s CEO, told Forbes in April: “Developers crave trust. Our message is simple: no tricks, no license traps, just innovation.”
Even OpenTofu’s community leaders play into that sentiment. In a panel earlier this year, an organizer quipped: “We’re not anti-HashiCorp. We’re anti-bait-and-switch.” The applause suggested the crowd knew exactly what that meant.
And inside HashiCorp? Engineers acknowledge the internal tension. One mid-level product manager leaked on Slack: “We’re rewarding Wall Street but bleeding goodwill in GitHub issues. That trade-off only goes one way in the long term.”
The Fallout
The immediate consequences are already surfacing in ways investors can’t easily ignore.
- Analysts at Goldman Sachs cut their 12-month target on HashiCorp after Q2 earnings, citing “lingering uncertainty around Terraform adoption and competitive encroachment.”
- CIOs are quietly rethinking contracts. A European bank confirmed that it is piloting OpenTofu as a hedge against Terraform reliance. Another enterprise, a media giant, told analysts it delayed expanding its Terraform automation by 18 months “pending stability of HashiCorp’s license model.”
- Venture funding is flowing toward alternatives. Sources say Pulumi closed a Series E round at a $1.1 billion valuation, buoyed by enterprises defecting from Terraform. Meanwhile, Linux Foundation’s backing makes OpenTofu hard to dislodge from the narrative.
But it’s not only investors and executives feeling the fallout. Developers—often the hidden foot soldiers in this war—carry the cost of uncertainty. Multiple GitHub issues in 2024 and 2025 revealed migration projects consuming thousands of engineering hours, with one engineer bluntly writing: “We wasted three quarters rewriting modules we already had.”
And yet, the deeper risk may be fragmentation. With Terraform, Pulumi, and OpenTofu locked in competition, enterprises now face a future where IaC isn’t standardized. That adds overhead, training costs, and integration headaches—turning what used to be stable infrastructure into shifting sand.
“This smells like another open-source civil war,” remarked one cloud strategist in a Gartner webinar. “The end result will be two or three winners, but until then, customers foot the bill for tribal battles they never asked to join.”
And developers? Fatigue is real. Constantly shifting between HCL (Terraform), TypeScript (Pulumi), or YAML-based pipelines creates cognitive drag. Attrition rates in some DevOps teams have spiked. In one leaked exit survey from a financial services firm, an engineer wrote simply: “I didn’t sign up to be a political pawn in the Terraform wars.”
Here’s where this gets bigger: Cloud providers themselves are circling. Industry whispers say AWS is developing deeper Pulumi integrations for CloudFormation, while Google Cloud is attending OpenTofu governance meetings. If the hyperscalers pick sides, the IaC showdown could explode into a full-scale platform war.
Closing Thought
Infrastructure as Code used to be settled territory—Terraform was the de facto king, and competitors stayed niche. But licensing drama cracked that façade, and challengers rushed in. Now investors watch HashiCorp bleed market cap, developers waste bandwidth on migrations, and enterprises hedge bets with duplicative investments.
Terraform may still hold the crown in Infrastructure as Code, but its throne no longer feels untouchable. Pulumi’s modern programming roots and OpenTofu’s open governance threaten death by a thousand cuts, while investors question whether HashiCorp miscalculated by prioritizing licensing revenue over community trust.
The only real question left is this: Can HashiCorp rebuild trust in a world where Pulumi and OpenTofu are turning defiance into momentum—or is Terraform destined to become the MySQL of IaC, a giant that defined a space but ceded its dominance to forks and alternatives?
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