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We have a web application (for internal users) using free version of AGPLv3.

The web application is NOT a commercial application. Do we need to use commercial license instead of free version?

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I assume that your web application would use a library that is licensed under AGPLv3, and this library is also available under a commercial license.

It doesn't matter at all whether your web application is commercial or not. As long as your web application is linked to a AGPLv3-licensed library, your web application too would be licensed under AGPLv3.

This means that you must make the source code of your web application available to those who can use your web application over a computer network.

If you don't want that, you need to use the commercially licensed version of that library.

This is based on section 13 of AGPLv3:

Notwithstanding any other provision of this License, if you modify the Program, your modified version must prominently offer all users interacting with it remotely through a computer network (if your version supports such interaction) an opportunity to receive the Corresponding Source of your version by providing access to the Corresponding Source from a network server at no charge, through some standard or customary means of facilitating copying of software.

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    Note: If the only people with access to the web-app are employees of a company and they do so as part of their job duties, then it can be said that the legal entity that the source needs to be disclosed to is the company itself. Feb 13 at 8:46

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