It’s just a shame there is no mechanism in the license to withdraw permission for this so-called university to use Linux at all
See JSON.org License which says it "shall be used for Good, not Evil" and is not considered free software.
Typically, OSS is both definitions at the same time - free monetarily, and "free" as in "freedom" to use. JSON is an interesting case of "free" monetarily but not totally "free for use".
Nobody would continue to use linux if they randomly banned people from using it, regardless of the reason.
[side note] This is why I despise the term "open source". It obscures the important part of user freedom. The term "Free/libre software" is not perfect, but it doesn't obscure this.