In the 1970ies Internet development competed against OSI.
It is widely believed that Internet succeeded due to adoption by IETF and other developers of "open source" culture.
Unix was the Internet reference platform, developed at Bell Laboratories and Berkeley Systems Department, University of California. AT&T were not allowed to sell computer operating systems as part of an anti trust settlement concerning the Bell US telephone monopoly.
Richard Stallman, while working on systems research at MIT became disaffected with proprietary software when ex colleagues who signed non-disclosure agreements with commercial employers could no longer freely share what they were working on and on account of a closed source printer driver which could not be maintained due to lack of source availability. Stallman's response resulted in the formulation of the principles of the free software movement and the founding of GNU and the Free Software Foundation in 1983, leading to the publication of the GNU manifesto in 1985.
GNU created many of the components needed for a free software operating system including various utilities and editors, and probably most importantly the GNU C compiler, now the GNU Compiler Collection (GCC). Meanwhile the XFree86 Project worked on developing free software suitable for window management.
By 1991, the last missing component needed for a completely free operating system was the kernel. Linus Torvaalds, by wanted to learn how a more complete operating system worked and developed the Linux kernel in order to fill this gap more successfully than various other free or almost free software kernel projects at that time.
The FreeBSD variants ( Free, Net and Open BSD) provided kernels with a legendary reputation for reliability, but these became fully free and available too late to capture the market momentum in the same manner of Linux. The BSD Unix kernels continue to be developed by volunteers funded by proprietary vendors who want to include BSD technology without having to disclose their own changes to it.
Some software is made free by placing this into the public domain. The user of this obtains various software freedoms:
More commonly, free software is made available under a copyright license which respects the above freedoms. Note that here the word freedom corresponds to the french word "libre" not the french word "gratis". Richard Stallman translates the meaning of libre as "free as in freedom". Not all software that is free as in price grants users the above freedoms, but all software licenses which provide the above freedoms enable free as in price distribution as a byproduct of other freedoms being unconditional.
Using a copyright license is claimed to have 2 benefits over consignment of software to the public domain. One is that the user of the software is considered to accept disclaimers of warranty or liability. The second concerns ensuring that the software freedoms are transmitted to all distributees or users if the copyleft or Affero Public Licenseis used.
Stallman's objectives were overtly political and moral. This was seen as a barrier to the use of free software within business and commerce by Eric Raymond and others who founded the OSI (not Open Systems Interconnection, the Open Source Initiative). So the term "Open Source" was coined as an alternative to the idea of free software, as a preferred means (by some) to promote software based on the same definitions of freedom as described above, but based entirely upon the claimed engineering and commercial benefits for developers and distributors working within these freedoms, while deliberately avoiding discussion of the political and moral issues.