I don't think it's a matter of "staying ahead"; the proprietary frontier models are better, but the trouble for them is that open weight models are good enough in increasingly many cases. This raises the floor on the frontier companies and cuts their total addressable market by commodifying the easier LLM tasks. This is really the central argument of tfa :)

The big question is if there are larger economic gains to be made from ever greater intelligence. It seems to me like that may be the case for only a select few hard problems, while the vast majority of tasks approach their economic ceiling asymptotically with intelligence.

You suggest that the market segment for frontier models is necessarily shrinking. But what if it's just a failure of imagination on the part of users ?