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Maybe I'm confused with the timeline but the actors involved, but:

> The company offered a managed version with its own proprietary additions

Doesn't sound like open source to me?

There are plenty of projects like that. Gitlab, for example, has an open-source "Community Edition" and then "Premium" and "Ultimate" editions which they charge for.

And even if it's all open source, there can be branding issues like Moodle and SugarCRM.

I think it's one of these "reading the letter of the law" instances. European laws (or rather, laws in European countries) often mandate public sector to use open source. The reasons vary, some of them are about promoting interoperability, and avoiding vendor lock-in, digital sovereignty, and the EU commission has a principle of "public money = public code".

So using open source on someone else's computer technically fulfills that requirement, without completing some of the reasons why the requirement exist (vendor lock-in in this particular instance is particularly laughable).

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