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Free Software
Free (as in freedom) software is a type of ethical software that's respecting its users' freedom and preventing their abuse, generally by availability of its source code AND by a license that allows anyone to use, study, modify and share the software. Free software is NOT equal to software whose source code is available or software that is offered for zero price, the basic rights to the software are the key attribute that has to be present. Free software stands opposed to proprietary software -- the kind of abusive, closed software that capitalism produces by default. Free software is not to be confused with freeware ("gratis", software available for free); although free software is always available for free thanks to its definition, zero price is not its goal. The goal is freedom.
Free software is also known as free as in freedom, free as in speech software or libre software. It is sometimes equated with open source, even though open source is fundamentally different (evil), or neutrally labelled FOSS or FLOSS (free/libre and open-source software). Software that is gratis (freeware) is sometimes called free as in beer.
Richard Stallman, the inventor of the concept and the term "free software", says free software is about ensuring the freedom of computer users, i.e. people truly owning their tools -- he points out that unless people have complete control over their tools, they don't truly own them and will instead become controlled and abused by the makers (true owners) of those tools, which in capitalism are corporations. Richard Stallman stressed that there is no such thing as partially free software -- it takes only a single line of code to take away the user's freedom and therefore if software is to be free, it has to be free as a whole. This is in direct contrast with open source which happily tolerates for example Windows only programs and accepts them as "open source", even though such a program cannot be run without the underlying proprietary code of the platform. It is therefore important to support free software rather than the business spoiled open source.
Is free software communism? This is a question often debated by Americans who have a panic phobia of anything resembling ideas of sharing and giving away for free. The answer is: yes and no. No as in it's not Marxism, the kind of evil pseudocommunism that plagued the world not a long time long ago -- that was a hugely complex, twisted violent ideology encompassing whole society which furthermore betrayed many basic ideas of equality and so on. Compared to this free software is just a simple idea of not applying intellectual property to software, and this idea may well function under some form of early capitalism. But on the other hand yes, free software is communism in its general form that simply states that sharing is good, it is communism as much e.g. teaching a kid to share toys with its siblings.
Definition
Free software was originally defined by Richard Stallman for his GNU project. The definition was subsequently adopted and adjusted by other groups such as Debian and so nowadays there isn't just one definition, even though the GNU definition is usually implicitly supposed. However, all of these definition are very similar and are basically variations and subsets of the original one. The GNU definition of free software is paraphrased as follows:
Software is considered free if all its users have the legal and de facto rights to:
- Use the software for any purpose.
- Study the software. For this source code of the program has to be available.
- Share the software with anyone.
- Modify the software. For this source code of the program has to be available. This modified version can also be shared with anyone.
Note that as free software cares about real freedom, the word "right" here is seen as meaning a de facto right, i.e. NOT just a legal right -- legal rights (a free license) are required but if there appears a non-legal obstacle to those freedoms, free software communities will address them. Again, open source differs here by just focusing on legality.
To make it clear, freedom 0 (use for any purpose) covers ANY use, even commercial use or use deemed unethical by society of the software creator. Some people try to restrict this freedom, e.g. by prohibiting use for military purposes or prohibiting use by "fascists", which makes the software NOT free anymore. NEVER DO THIS. The reasoning behind freedom 0 is the same as that behind free speech: allowing any use doesn't imply endorsing or supporting any use, it simply means that we refuse to engage in certain kinds of oppression our of principle. Trying to mess with freedom 0 would be similar to e.g. prohibiting science on the ground of the fact that scientific results can be used in unethical ways -- we simply don't do this. We try to prevent unethical behavior in other ways than prohibiting basic rights.
Source code here means the preferred form in which software is modified, i.e. things such as obfuscated source code don't count as true source code.
The developers of Debian operating system have created their own guidelines (Debian Free Software Guidelines) which respect these points but are worded in more complex terms and further require e.g. non-functional data to be available under free terms as well (source) which GNU doesn't (source). The definition of open source is yet more complex even though in practice legally free software is eventually also open source and vice versa.
History
Free software was invented by Richard Stallman in the 1980s. His free software movement inspired later movements such as the free culture movement and the evil open-source movement.