I am on sabbatical for two quarters, and I am taking the opportunity to write about free (and open source) software for the first time. It is ballooning quickly, chaotically, from a conference paper into a book–in a good way I think. I am trying to relax and let the inquiry carry me where it will, not trying to discipline it into the conference paper. That might be bad for the conference paper, but it is good for the overall inquiry (I hope). We will see.
One of the many side flows I have been carried off into was the case of former Microsoft CEO (and current LA Clippers owner!) Steve Ballmer, who in 2001 said “Linux is a cancer that attaches itself in an intellectual property sense to everything it touches.” The take-away from this is usually to vilify Ballmer because he called Linux a mean name, but I think there is something quite important here. I think Ballmer is really worried. What he is getting at is that the GNU General Public License, under which much Linux software is distributed, prevents the person receiving the software from enclosing it. That is, when you receive software under the open-source GPL, you are not allowed to then turn around and make the code closed-source (i.e. you can’t transform it into “intellectual property”), even if you alter it significantly. Since Microsoft’s empire is built on intellectual property, on code that is very closed-source, Ballmer is genuinely worried about the possibility that code licensed under the GPL, if it got into Microsoft’s stream, would bar them from claiming intellectual property rights on the whole stream. [Here the scenario would be something like: a certain tool that is licensed under the GPL becomes dominant (something like, say, OpenSSH) and more or less has to be used as a part of a larger entity (say, a server OS).] But Ballmer’s fear could have run even deeper. Even if Microsoft were vigilant in keeping any GPL code out of their products, if everyone else adopted the GPL ethos, which is to make software freely available, open, and held in common, where would that leave Microsoft, which is dependent on the model of software as enclosed intellectual property?
A less-quoted Ballmer attack on Linux came in 2000, at Microsoft’s financial analysts’ meeting, where he said
Linux is a tough competitor. There’s no company called Linux, there’s barely a Linux road map. Yet Linux sort of springs organically from the earth. And it had, you know, the characteristics of communism that people love so very, very much about it. That is, it’s free. And I’m not trying to make fun of it, because it’s a real competitive issue. Today, I would say, we still don’t see a lot of Linux competition in most quarters on the desktop, and we see a lot of Linux competition in some server markets. And we could either say, hey, Linux is going to roll over the world, but I don’t see that happening. That’s not what’s going on right now.
He is sort of right about Linux. It did spring organically from the earth, in a way. Significant parts of it are still community-managed. But corporations (Red Hat, Canonical, Sun, and now Google) have played and continue to play a very large role in its development and distribution. It does have characteristics of communism, actual communism rather than State-socialism-that-claims-to-be-communism, in that the code is meant to be held in common by all. And, interestingly, in 2000 Ballmer got the competition part mostly right. Linux was not and has not become competitive on the desktop. But Linux very much became competitive in the (probably more important) server market, where is now holds a controlling position over Microsoft. And, what Ballmer did not see, Linux (as the core of the Android operating system) became the dominant software on phones and tablets as well.
The struggle is over, and Microsoft lost. Their closed-source, proprietary model, which was absolutely central to their success, has been mostly superseded by the open-source, un-owned, free-of-cost model. In a way, Linux did roll over the world.
The question now is not so much open- vs. closed-source software, but whether open-source software will be developed, distributed, and maintained by active communities of people themselves, or whether that work will be done for them, by large corporations. I think it is a vital question, and it is one the Linux community has lots of experience with.
Path to the Possible 
I wish I could share your optimism of the future of open-source software (or the business model in which open-source software is produced) but the war between free software (à la Stallman) and proprietary software is far from being won. In fact, mobile phone industry is the prime example of it. As you mentioned, Android Open Source Project (AOSP) and its derivatives have the largest share in the mobile OS market, which, however, treacherously creates an illusion that AOSP is free. On the contrary, it is far from being free. Most of the software that run on mobile phones (i.e. apps) are proprietary apps, mining more personal data than their desktop counterparts due to Android’s bizarre permission system (changed in Marshmallow but still obsolete in practice). And, Google makes some of these proprietary software part and parcel of AOSP, not least Google Play, Hangouts, Phone, Google Now, and other applications that bundles with any Android phone. One can install Cyanogenmod ROM or similar free environments to get away from Google’s grip but the market is dominated by non-free software. This is also true for server market, where, as you correctly stated, Unix-based software is prominent, but proprietary software is relied on for exchange (Gmail, Facebook, Skype, Dropbox, Chrome, etc.). I think you’re absolutely right about how important free software is – the Linux Foundation has recently started a campaign, called “A World without Linux”, publishing silly videos now and then. It is important to raise the awareness for free software and made it widely available for everyone for fair, equal, and secure software environment. Github, F-Droid for Android, and Mozilla Foundation are forwarding these agendas and I, for one, am quite curious as to how the future of free software will unfold. However, free and proprietary software are in constant battle, and neither is willing to yield at the moment.
Thanks for the comment. To be clear I don’t think free software a la Stallman has conquered proprietary software. I think open-source (very different from free as the FSF defines it) software is the development model that is clearly ascendant vis proprietary software. Android isn’t free software, but the Linux kernel at its core is open-source. That doesn’t mean that there is no proprietary software anymore, it just means that such ‘proprietarity’ isn’t necessary to the project anymore. Microsoft’s bedrock business model–write a piece of closed-source, proprietary software to sell to others at monopoly prices–is obsolete. Owning software as intellectual property is not how corporations are going to make profit now. This is precisely what Ballmer was worried about (because he couldn’t imagine Google’s ad-based model at the time). So while we should continue to make sure that software is open-source, that is not really what’s important now. What’s important now is whether we actively develop, distribute, and maintain open-source software ourselves, or whether we let corporations like Google do it for us.