In January 1998, Netscape announced it would release the source code to its Navigator browser — a decision influenced in part by eric-raymond's arguments about the superiority of open development. The announcement created an opportunity that a group of free software advocates in the San Francisco Bay Area moved quickly to seize: if a major corporation was going to release its source code, the framing of that release could shape how an entire generation of developers and corporations understood "free software."
The Freeware Summit (the meeting was called by different names by different participants) brought together eric-raymond, bruce-perens, Christine Peterson, and others in Palo Alto in February 1998. Christine Peterson proposed "open source" as an alternative term to "free software." The term was deliberately neutral on the question of whether software freedom was an ethical requirement — it described the availability of source code as a development practice, not as a user right. eric-raymond and bruce-perens moved quickly to institutionalize the term, founding the open-source-initiative to promote it and developing the Open Source Definition (based on bruce-perens's Debian Free Software Guidelines) as its definitional framework.
stallman's response was swift and unequivocal, and it has not changed in the decades since. His position, elaborated at length in why-open-source-misses-the-point and other writings, is that "open source" is a deliberate evasion of the ethical argument: it talks about the practical benefits of source code availability (better software, better security, faster development) while refusing to say that users have a right to software freedom. stallman argues this is not just a marketing difference but a philosophical one with real consequences: companies and developers who adopt open source for pragmatic reasons will abandon free software principles whenever pragmatism and principle conflict.
The software-freedom-vs-open-source distinction became the central ideological divide of the free-vs-open-source-schism-1998-2007 era. Both camps could and did endorse the same licenses — the GPL is also an "open source" license by OSI's definition — but they endorsed them for different reasons. The schism reflected genuine differences about whether software is a consumer product to be optimized, a shared technical commons to be cultivated, or a domain of civil rights to be defended.