Them complaining about distillation is 100% hypocritical, but also understandable; they found a goose laying golden eggs, but didn't expect it to be so easy to clone through distillation.

It's just ordinary business. You always have to get every benefit you can and deny everything you can to your competitors. The basic premise of free market economics is that when everyone does this, it will even out. OpenAI doing everything they can to stop DeepSeek, together with DeepSeek doing everything they can to stop OpenAI stopping them, is expected market behaviour. David Graeber wrote about this as his "goon" category of Bullshit Job.