"This new tool allows for writing all this code ..... but every person and company, in unison, in a grand conspiracy, all decided to only write private software with it that they aren't releasing to the public in any way"

Seems reasonable

Doesn't have to be "every person and company, in unison, in a grand conspiracy" and other such strawmen.

We could try steelmaning this argument instead: it's enough that most big companies who would otherwise have incentives to contribute.

Before FOSS got in fashion, around the early 2000s, most commercial companies wouldn't touch it as contributors and were openly avert to it, and to open sourcing their stuff. This can be the case again.