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GNU is a project by the Free Software Foundation (FSF) to produce an open source Unix like operating system. The FSF followed the Unix Philosophy by building the tools that would be neccesary first. The development of the Linux kernel which provided a compatible kernel meant that the aim of the project was complete.
Naming Controversy[]
Richard Stallman tried to convince the Linux community that since the GNU tools were an essential part of the Linux operating system, it should be called GNU/Linux. However as it was pointed out many other components also go into the operating system (such as X). Most Linux distributions just stick to the name "Linux".