Android operating system is open source under the project name AOSP (Android Open Source Project). However the development is primarily led by Google. Google internally develops Android and then patches their changes onto the external open sourced code.

However, this process is changing now. Google has decided that the development will happen privately inside Google and then google will just publish the code as open source.

This makes development process faster according to Google; as Android engineers don’t have to spend time managing merge conflicts.

Does this make a difference?

This should not make any difference to android users or companies that make phones based on the OS. As Google has clarified that they remain committed to the open source nature of the product.

There is a good chance that Google will move a lot of Android functionality under the closed source GMS Core (Play Services) while keeping Android barebone. This is also expected.

Google clarifies that this shift does not alter the release cadence of new Android builds. Instead, the move aims to streamline the development process and mitigate potential conflicts arising from branch merging. The core principle of Android remaining an open-source platform is unchanged. New features and updates will still be released to AOSP, albeit after they’ve been finalized in the internal branches. This change primarily affects the timing of when these updates become publicly accessible. [source]