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The software is free...?

'Free' here is as in 'freedom'.

I can download, run, study, modify/fork and redistribute both the client and server software, so I'm not sure what freedom is missing.

I prefer free/libre software as well. I'm really not trying to sound inane when I say that I provide my phone number for the same reason I provide my phone number directly to my friends with whom I would like to communicate. It allows people I know to identify me among the billions of other people who have phone numbers.

To repeat my question, how are apps that require a phone number scamming users?

Signal is GPLv3 software, so it is free as in freedom.