Software communities that can now be compared with today's free software community existed for a long time before the free software movement and its term "free software". According to Richard Stallman, the software sharing community at MIT existed for "many years" before he got involved in 1971.
Software was produced largely by academics and corporate researchers working in collaboration and was not itself seen as a commodity. Operating systems, such as early versions of UNIX, were widely distributed and maintained by the community of users. Source code, the human-readable version of software, was distributed with software because users frequently modified the software themselves to fix bugs or add new functionality, and because programmers couldn't possibly create executable machine-code for the wide variety of hardware that existed. Thus in this era, software was free in a sense, not because of any concerted effort by software users or developers, but rather because software was developed by the user community.
AT&T distributed early versions of UNIX at no cost to government and academic researchers, but these versions did not come with permission to redistribute or to distribute modified versions, and were thus not free software in the modern meaning of the phrase.
In the late 1970s and early 1980s, companies began routinely imposing restrictions on programmers through copyright. Sometimes this was because they saw a way to make money by blocking rights and selling them back. Bill Gates signaled the change of the times in 1976 when he wrote his now-famous Open Letter to Hobbyists, sending out the message that what hackers called "sharing" was, in his words, "stealing". In 1979, AT&T, for example, began to enforce its restrictive licences when the company decided it might profit by selling the Unix system.
The advent of Usenet in the early 1980s further connected the programming community and provided a simpler way for programmers to share their software and contribute to software others had written.
In 1983, Richard Stallman launched the GNU Project to write a complete operating system free from constraints on use of its source code. Particular incidents that motivated this include a case where a printer wouldn't work and its users couldn't fix the problem because the source code was withheld from them. The final impetus, however, for the GNU project and its manifesto was a disagreement between Stallman and Symbolics, Inc. over Stallman's access to changes Symbolics had made to a program he wrote.
In 1989, the first version of the GNU General Public License was published. A slightly updated version 2 was published in 1991.
In 1989, some GNU developers formed the company Cygnus Solutions.
The GNU project's kernel, later called "GNU Hurd", was continually delayed, but most other components were completed by 1991. Some of these, especially the GNU Compiler Collection, had become market leaders in their own right. The GNU Debugger and GNU Emacs were also notable successes.
Until this point, the GNU project's lack of a kernel meant that no complete free software operating systems existed. The development of Torvalds' kernel closed that last gap. The combination of the almost-finished GNU operating system and the Linux kernel made the first complete free software operating system.
Among GNU/Linux distributions, Debian GNU/Linux, begun by Ian Murdock in 1993, is noteworthy for being explicitly committed to the GNU and FSF principles of free software. The Debian developers' principles are expressed in the Debian Social Contract. Since its inception, the Debian project has been closely linked with the FSF, and in fact was sponsored by the FSF for a year in 1994-5. In 1997, former Debian project leader Bruce Perens also helped found Software in the Public Interest, a non-profit funding and support organization for various free software projects.
GNU/Linux remains free software under the terms of the GNU GPL, but many businesses offer customized Linux-based products, or distributions, with commercial support. The naming remains controversial inside the free software community, with groups arguing for either "Linux" or "GNU/Linux" for the whole operating system.
When the USL v. BSDi lawsuit was settled out of court in 1993, FreeBSD and NetBSD (both derived from 386BSD) were released as free software. OpenBSD forked from NetBSD in 1995. Other more recent forks also exist.
In 1997, the Debian project published their Debian Free Software Guidelines.
In the mid to late 90s, when many website-based companies were starting up, free software became a popular choice for web servers. Apache HTTP Server became the most used web server software - a title that still holds as of 2008. Systems based on a common "stack" of software with the Linux kernel at the base, Apache providing web services, the MySQL database engine for data storage, and the PHP programming language binding it all together, came to be known as LAMP systems.
In 1997, Eric Raymond published The Cathedral and the Bazaar, a reflective analysis of the hacker community and free software principles. The paper received significant attention and in early 1998 and was one factor in motivating Netscape Communications Corporation to release their popular Netscape Communicator Internet suite as free software. This code is today better known as Mozilla Firefox and Thunderbird.
Netscape's act prompted Raymond and others to look into how to bring free software principles and benefits to the commercial software industry. They concluded that FSF's social activism was not appealing to companies like Netscape, and looked for a way to rebrand the free software movement to emphasize the business potential of the sharing of source code. The new name they chosen was "open source," and quickly Bruce Perens, publisher Tim O'Reilly, Linus Torvalds, and others signed on to the rebranding. The Open Source Initiative was founded in February 1998 to encourage use of the new term and evangelize open source principles.
However, Richard Stallman and the FSF harshly objected to the new organization's approach. They felt that, with its narrow focus on source code, OSI was burying the philosophical and social values of free software and hiding the issue of computer users' freedom. Stallman still maintained, however, that users of each term were allies in the fight against proprietary software.
KDE was founded in 1996 by Matthias Ettrich. At the time, he was troubled by the inconsistencies in UNIX applications. He proposed a new desktop environment. He also wanted to make this desktop easy to use. His initial Usenet post spurred a lot of interest.
Matthias chose to use the Qt toolkit for the KDE project. At the time, Qt did not use a free software license. Members of the GNU project became concerned with the use of such a toolkit for building a free software desktop environment. In August 1997, two projects were started in response to KDE: the Harmony toolkit (a free replacement for the Qt libraries) and GNOME (a different desktop without Qt and built entirely on top of free software). GTK+ was chosen as the base of GNOME in place of the Qt toolkit.
In November 1998, the Qt toolkit was licensed under the free/open source Q Public License (QPL). But debate continued about compatibility with the GNU General Public License (GPL). In September 2000, Trolltech made the Unix version of the Qt libraries available under the GPL, in addition to the QPL, which has eliminated the concerns of the Free Software Foundation.
Both KDE and GNOME now participate in freedesktop.org, an effort to standardize Unix desktop interoperability, although there is still some competition between them.
In August 1999, Sun Microsystems released the StarOffice office suite as free software under the GNU Lesser General Public License. The free software version was renamed OpenOffice.org, and for a while (until March 5, 2005 when Sun Microsystems discontinued StarOffice) coexisted with StarOffice. StarOffice continues to be available, but no longer as freeware.
In May 8, 2007, Sun Microsystems released the Java Development Kit as OpenJDK under the GNU General Public License. Part of the class library (4% of it) could not be released as open source due to them being licensed to other parties and were included as binary plugs. Because of this, in June 2007, RedHat launched IcedTea to resolve the encumbered components with the equivalents from GNU classpath implementation. Since the release, most of the encumbrances have been solved, leaving only the audio engine code and colour management system (the latter is to be resolved using LittleCMS).