> I believe this because I also believe there used to be two terms open source, and free, that these were distinct, and that all things that were open source were not necessarily free or vice versa.

There are certainly ideological differences between the two; but I think it's primarily in terms of focus. The FSF primarily aims at promoting "software freedom" as an end in itself; RMS claims that it is unethical to give people software but prevent them from sharing or modifying it. As such, they much prefer to use copyright law to promote "software freedom", by things like the GPL and AGPL. But (as I understand it), since more permissive licenses like BSD or MIT licenses do allow the "four freedoms", they consider them "free software" (albeit second-class, because unlike copyleft licenses, they don't fight to keep derivatives "free").

"Open source" was meant to focus more on the benefits of the open, collaborative software development model, without denigrating proprietary software; and, in particular, to be more palatable to large companies. As such, permissive licenses (BSD, MIT, Apache, &c) are considered just as valid as copyleft licenses (GPL, APL, &c).

But saying, "You're not allowed to run a service using our software because it might compete with us" is Right Out.