Whose fallacy?

Anyhow, to the concrete argument, rather than responding to your mud-slinging.

Are you aware that there are lots and lots of non-Free drivers that have never gone into Linux, because they would be blatant violations of the GPL, but that are nevertheless offered to the public by manufacturers of the corresponding devices, and even by some distributors?

Had Linus decided to keep the non-Free firmware out, just like he has been doing for the past couple of years, moving it to the firmware tree and then to a separate repository, this wouldn't have changed, except that the non-Free firmware would be about as much of a second-class citizen as the non-Free drivers have always been. Less so, even, because drivers actually depend on the kernel ABI and API, whereas firmware depends at most on driver-specific ABIs.

So, no, GNU/Linux wouldn't have lost in popularity. That's as fallacious as the often-brought-up argument that, if distros didn't include the firmware, users would be left with non-functional computers. That's utter nonsense. When people bought the computers, they already got the firmware straight from the hardware vendor!

Now, had Linux taken a hard stance back then, much of the same firmware would likely still have been pushed onto customers willing to tolerate that, with or without help from distros. Others might have been released as Free Software, like those that were present in Linux 1.3.0.

Even if Linux had taken a merely informative stance, rather than mopping the garbage under the rug like it did, customers might at least have been aware of the problem back then, if they happened to pay attention, instead of being fooled for a whole decade. And then, the problem might have been reduced, if enough people, becoming aware of it, took action, rather than becoming “so hopelessly dependent on the system that they will fight to protect it” -- Morpheus.