This is a follow-up from T196043, in which we discovered the wikidiff2 license (GPL v2 or later) is incompatible with the PHP license. This makes it impossible to redistribute. :(
We could probably get all of the Wikimedia contributors to agree to a relicense to MIT, but there is code from Geoffrey Dairiki and GNU diffutils that seems unlikely for us to be able to relicense.
On IRC Tim said, "theoretically we could replace the GPL bits with another diff engine implementing the same interface, ultimately it all comes from published computer science literature".