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The GNU project was launched by Richard Stallman with the goal of creating a complete free operating system: the GNU system. The project was announced to the public on September 27, 1983, on the net.unix-wizards newsgroup. The original announcement was followed by Stallman's "GNU Manifesto" and other essays that laid out his motivations for the GNU project, one of which was to "bring back the cooperative spirit that prevailed in the computing community in earlier days".

GNU is a recursive acronym for "GNU's Not Unix". Stallman requests that it be pronounced guh-NOO to "avoid horrible confusion" with the word "new". UNIX is the name of a proprietary operating system that was already in widespread use; since its architecture had proven technically sound, the GNU system was designed to be compatible with it. The UNIX architecture allowed GNU to be written as individual software components: components that were already freely available, such as the TeX typesetting system and the X Window System graphics system, could be adapted and reused; others would be written from scratch.

To ensure that GNU software would remain free for all users "to run, copy, modify and distribute", the project would release it under a license designed to give everyone those permissions while preventing them from adding restrictions of their own. This idea, referred to as copyleft, was then embodied in the GNU General Public License (GPL).

In 1985, Stallman founded the Free Software Foundation (FSF), a tax-exempt charity, to provide logistical, legal and financial support for the GNU project. The FSF also employed programmers to contribute to GNU, though a substantial portion of development was (and continues to be) performed by volunteers. As GNU gained prominence, interested businesses began contributing to development or selling GNU software and technical support. The mos t prominent and successful of these was Cygnus Solutions, now part of Red Hat.

By 1990, the GNU system had an extensible text editor (Emacs), a very successful optimizing compiler (GNU Compiler Collection or GCC), and most of the core libraries and utilities of a standard UNIX distribution. The main component still missing was the kernel.

In 1991, Linus Torvalds wrote the UNIX-compatible Linux kernel and released it under the GPL. Linux was further developed by various programmers over the Internet. In 1992, Linux was combined with the GNU system, resulting in a fully functional free operating system. The GNU system is most commonly encountered in this form, usually referred to as a "GNU/Linux system" or a "Linux distribution". As of 2003, the Hurd is still in active development, and an experimental version of the GNU system that uses the Hurd instead of Linux is now available.)