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What does the "ASP loophole" refer to?

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The ASP in the term refers to "Application Service Provider," what we might now call Software-as-a-Service provider. The loophole is based on the narrow definition that the GPL uses for distribution. While there was some debate on the subject when the GPL was updated in version 3, the old definition remained. As such, GPL licensed assets that are hosted - such as Google's search application - are not subject to the reciprocal terms of the license, which would require that the resulting derivative software be made available under the same terms.

There is a variant of the GPL, however, that explicitly closes the loophole. Termed the Affero GPL, or AGPL, it is identical to the GPL with the exception that it regards hosted software as being distributed, thus triggering the protections of the license.

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The term “ASP loophole” refers to a common way to gain the benefits of a copyleft license without fulfilling the obligation of passing on equivalent freedoms to the further recipients of the work.

The loophole referred to is that an “Application Service Provider” (hence “ASP”) gains the benefit of the freedom of a copyleft license, by running the program and (presumably) gaining whatever benefits come from having people access the running program across the network; but the provider can argue that they themselves are not redistributing the work as such, so they are not obliged to offer recipients the same freedom.

Closing this loophole is difficult, not least because it involves coming up with wording to distinguish when a program has a distinct “user” across the network who should be offered the freedoms in the work. The Affero GPL (“AGPL”) is one effort, moderately successful but certainly not without its problems.

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