This paper investigates the intricate link that exists between Free and Open Source Software (FOSS) and the legal and regulatory framework that exists inside the European Union. The study illustrates the problems and possibilities given by this dynamic area by charting the growth of FOSS from its ideological roots to its current standing as a significant economic and technical force. The paper examines the policy steps taken by the European Union to encourage the use of FOSS in public administration, as well as the influence that new technologies, such as artificial intelligence, have had on the ecology of FOSS. In addition, it digs into the legal complications that surround FOSS, including concerns about licensing and the enforcement of copyright. In its conclusion, the paper provides policy proposals with the goal of fostering a sustainable and thriving FOSS ecosystem inside the European Union while maintaining a balance between the need for innovation and regulatory control.