But it is nearly functionally identical, that's the fact of the matter. It's open source with one tiny restriction that matters to nearly nobody. That sounds pragmatically equivalent to me, from the definitions of those words. I find your claim more dishonest than theirs on that basis. You're trying to say it's a far cry from open source, and that's just not the case.
No, its not. Its superficially similar (in much the same way that, say, the Constitution of the USSR was superficially similar to a liberal democratic constitution), but not having key commercial uses reserved for a rent-seeking copyright owner is central to the function of F/OSS.
> It's open source with one tiny restriction that matters to nearly nobody.
It matters to lots of people; sure, very few people are likely to directly exercise it, but that others are free to exercise it is central to the value proposition of open source for other users.
That's not meaningful; there's a reason why the FSF and OSI have very similar criteria that end up being essentially identical in practical application; the value associated with F/OSS isn't on a smooth continuum that varies with proximity to those definitions, there's a very sharp cliff near the edge and this is outside of it.
That other actors are free to commercially exploit, including offering SaaS versions without restriction, the software is a major benefit against vendor lock-in for users, even if they have no desire to exercise that freedom directly, and has important effects on building a diverse, invested community around a piece of software. Restricting this to allow rent extraction, while not unethical (outside of, e.g., the ideological framework of the idealistic Free Software community, as opposed to the F/OSS for pragmatic reasons communiry) in the same way other proprietary-licensed commercial software is not unethical, does not even approximate the value of F/OSS.
Vendors can keep having proprietary rent-protection licenses, they just need to stop trying to convince the Open Source community that they are somehow pragmatically equivalent to Open Source. They aren't, even approximately, and critically that is the entire reason that vendors choose them, so they need to stop the dishonest sales pitches.