The FSF are even stronger than the OSI on the point that people must also have the freedom to charge for the software if they want:

  Many people believe that the spirit of the GNU Project 
  is that you should not charge money for distributing 
  copies of software, or that you should charge as little 
  as possible — just enough to cover the cost. This is a
  misunderstanding. Actually, we encourage people who
  redistribute free software to charge as much as they 
  wish or can.

-- http://www.gnu.org/philosophy/selling.html

He's right for values of "open source" defined by the OSI.

However, you need to do more than they have done if you want to clearly and unambiguously define a phrase, especially one that has legal and commercial implications. You need to make everyone in the world agree on the definition and refrain from using it in any other way. That hasn't happened yet, except perhaps for those within the industry.

As Richard Stallman says:

"However, the obvious meaning for the expression “open source software”—and the one most people seem to think it means—is “You can look at the source code.” That criterion is much weaker than the free software definition, much weaker also than the official definition of open source. It includes many programs that are neither free nor open source."

"The term “open source” has been further stretched by its application to other activities, such as government, education, and science, where there is no such thing as source code, and where criteria for software licensing are simply not pertinent. The only thing these activities have in common is that they somehow invite people to participate. They stretch the term so far that it only means “participatory”."

http://www.gnu.org/philosophy/open-source-misses-the-point.h...

If he doesn't agree with the OSI definition, I think that we can agree that it is not universally accepted.

Microsoft came up with the term "shared source" to describe "you can look at the source but you have no rights to modify or redistribute it."

This is not the case. GPL is the only strong copyleft license of those, but they are all free software licenses according to the FSF (http://en.wikipedia.org/wiki/List_of_FSF_approved_software_l...).

Actually, free software as defined by the FSF is any software licensed such that you can use it, modify the source, redistribute it, and redistribute changed copies of it.

See http://www.gnu.org/philosophy/free-sw.html and the (long) list of free software licenses http://www.gnu.org/licenses/license-list.html

There isn't one. The only difference is who's ego you stroke ESR(Open Source), or RMS(Free Software).

From the history of the OSI:

The conferees decided it was time to dump the moralizing and confrontational attitude that had been associated with "free software" in the past and sell the idea strictly on the same pragmatic, business-case grounds that had motivated Netscape.

The only difference is marketing not substance.