This is a potential loophole. Companies could have an "open source" OS but restrict installations like Tivo did in the 2000s (i.e. "Tivoization"). Or they could allow installation of modified software but restrict functionality like the way the Google Play Integrity API can nerf apps running on custom builds of Android.

Or, they can have a license like the Business Source License where you can copy, redistribute, and modify the software but you can't use it commercially. This goes against OSI's open source definition.

We emailed this amendment to Buffy Wicks's staff:

§1798.504(f) This title does not apply to[...]:

(4) An operating system or application that meets both of the following conditions:

(A) The operating system or application is distributed under license terms that permit a recipient to copy, redistribute, and modify the software, including for commercial purposes and without payment of a royalty or fee.

(B) The operating system provider or developer does not, by technical or contractual means, prevent the recipient from installing modified versions of the software on a device on which the unmodified version operates, and does not restrict the functionality or interoperability of modified versions.