What regulation are they proposing that is actually a serious barrier to making a company around AI?
If OpenAI just wants to prevent another OpenAI eating its lunch, the barrier there is raw compute. Companies that can afford that can afford to jump regulatory hurdles.
The open source community will catch up in at most a year or two, they are scared and now want to use regulations to strangle competitions.
While their AI is going to advance as well, the leap will not be qualitative as the ChatGPT gen 1 was - so they will lose competitive advantage.
The trick is that companies' moats against commoditization (open source or not) usually have little to do with raw performance. Linux could in theory do everything Mac or Windows do, but Apple and Microsoft are still the richest companies in the world. Postgres can match Oracle, but Larry Ellison still owns a private island.
The moats are usually in products (bet: There will not be any OSS product using LLM within a year. Most likely not within two. No OSS product within two or three years or even a decade will come close to commercial offerings in practice), API, current service relations, customer relations, etc. If OpenAI could lock customers to its embeddings and API, or embed its products in current moats (e.g. Office 365) they'll have a moat. And it won't matter a bit what performance OSS models say they have, or what new spin Google Research would come up with.
It doesn't want to be one of the successful companies, it want to be the only one, like it is now, but forever.