>but seem unlikely to surpass the companies that are training these models from scratch

Then why is it a problem?

Another serious question.

Trying to get my head around what the root of the objection is here. There must be some fear, but if that fear is not a fear of being surpassed in the market, then what is the fear?

A fear of competition causing a failure to recoup the trillions invested in AI via sky-high margins, and starting a (short) chain-reaction that causes the bubble to pop (or fizzle). A lot of people have a lot riding on the AI bubble not popping.

I didn't say it was a problem, I said it "mattered"

If I wanted to argue that it's a problem, I'd just say that companies investing billions in training frontier models should reap the rewards. And distillation is essentially theft.