If thinking about network APIs is already causing you headaches, then the news of Ericsson’s acquisition of a minority stake in LotusFlare last week may not bring much comfort. The software developed by LotusFlare, headquartered in California, is clearly seen as more valuable by Ericsson than its own. In the increasingly complex web API story, this new member has joined the ranks of thousands of companies, with a plot twist comparable to a thrilling spy thriller, but cannot guarantee a satisfactory ending.

Ericsson is interested in the part of the LotusFlare product portfolio called DNO Cloud, whose various components seem to be helpful in helping operators open up network functionality. This includes Ericsson’s description of “consent management” and “digital commerce solutions” in the transaction statement. Ericsson stated that the basic idea of this collaboration is to provide a universal solution blueprint for the integration that occurs in the “network API open layer”.

But Omdia’s chief analyst James Crawshaw is not sure how much this Swedish manufacturer can do. In a post on LinkedIn regarding this transaction, he wrote: “It appears that the generic blueprint is based on DNO Cloud, rather than any of Ericsson’s own BSS (Business Support System) products (such as product catalog management).”

For those who are increasingly confused about network API related affairs, Crawshaw’s efforts to make everything as clear and concise as possible are commendable. He even drew several charts showing how the various parts fit together, just like the flat packaging instructions that come with IKEA furniture in Sweden (how can Swedes and complexity be related?). LotusFlare occupies multiple positions in the busy area between one side of the network and the other side of the application developer.

A few years ago, when Börje Ekholm, the head of Ericsson for the past nine years, began discussing network APIs during the quarterly earnings conference call, the latter received a lot of attention. The grand plan is to have businesses and consumers pay for previously undiscovered and undervalued features of 5G, such as low latency (a measure of network signal transmission time), precise location tracking, security, and even more questionable ultra fast speeds.

Ericsson believes that these features have not been fully explored because they have not yet been fully open to developers who write software applications through application programming interfaces (APIs), and consumers and businesses may access these applications through 5G networks. If this openness can be achieved at the level of industry coordination, developers will be more willing to pay for the required APIs and related services.

In addition to selling APIs, operators can also generate new revenue from additional usage. An example of an overused consumer is someone who decides to gain enhanced connectivity while attending a live concert, in order to live stream footage through social media applications. The industry has become accustomed to referring to this specific 5G network feature as “on-demand quality”, inadvertently implying that quality is not a component of standard 5G services.

However, to achieve all of this, Ericsson seems to have to do much more than investing in Lotus Flare. Ericsson’s journey in network APIs began about four years ago when it offered $6.2 billion to acquire American software developer Vonage. The Swedish company stated that the most expensive acquisition in its history was necessary due to Vonage’s expertise in APIs. Further complicating the situation, Ericsson subsequently spun off the portion of Vonage responsible for aggregating APIs and placed it in a new joint venture called Aduna. It acts as an intermediary between developer platforms such as Vonage and the internet. Ericsson holds 50% of Aduna’s shares, with the remaining shares shared among major telecommunications operators.

If you feel confused, you are not alone. What is particularly elusive is how Ericsson can expect to make money. Ericsson has repeatedly stated that Aduna should not be profitable, but only cover costs. Therefore, any monetization of APIs must be achieved through Vonage. But it has to compete with numerous other platforms that interact with Aduna. As the largest shareholder of Aduna, does Vonage enjoy preferential treatment over competitors such as Infobip, Twilio, and Google? Is it correct to think about all of this in this way?

According to data provided by Omdia, the market size of these network APIs will only generate an annual revenue of $160 million in 2023. But it is expected to reach about 750 million US dollars this year and exceed 8.7 billion US dollars by 2029. For companies like Ericsson, their sales last year were approximately $26.4 billion (at current exchange rates), which is a significant amount of money.

However, currently Vonage has not seen any growth at all. Its sales decreased from 16.4 billion Swedish kronor (1.7 billion US dollars) in 2023 to 14.8 billion kronor (1.6 billion US dollars) one year later. In the first nine months of 2025, sales decreased by 13% year-on-year to 9.8 billion kronor (1 billion US dollars). Profit is completely absent. Since Ericsson’s acquisition in July 2022, Vonage has recorded a cumulative operating loss of 200 million kroner (21.3 million US dollars) based on a total sales revenue of 48 billion kroner (5.1 billion US dollars).

Nevertheless, the $8.7 billion API revenue cannot restore the growth of telecom operators, whose annual sales in global fixed and mobile services are approximately $1 trillion. All their hopes are based on the idea that applications built with APIs will increase service usage. About two years ago, McKinsey, an authority in the consulting industry, estimated that APIs would “unlock about $100 billion to $300 billion in connection and edge computing related revenue for operators” in the next five to seven years, while bringing those basic APIs revenue. So far, almost no signs have been seen.

Meanwhile, Ericsson has written down the value of its investment in Vonage by approximately $4 billion, prompting a stock analyst to accuse it of “value destruction” last year. Please be patient “has always been the catchphrase of this company. No one would be surprised if Ericsson continued to recite the same words when the Christmas lights were lit up one year later.