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Free as in speech, not free as in beer.
Free to use the program
Free to study how the program works, and adapt it to your needs
Free to redistribute copies to anyone
Free to improve the program and release the improvements to the community
Notes:
Freeware is not free software, because the public is not allowed access to the source code, and can therefore make no modifications.
Open Source simply means that you can see the source code – but that doesn't give you the right to change it, or resell it.
For example, Microsoft is trying to convinve the world that their “Shared Source” program will result in quality of software equivalent to that of Free Software. But you have to sign an NDA (non-disclosure agreement) to read their code, which clearly demonstrates that Shared Source has nothing to do with the original Open Source/Free Software development process.