Isn't that kind of the same like Line6 emulating the exact electric circuits of amps and pedals, or like everyone and their dog is now building and selling Klon clones?

I think guitar effects have been mostly about doing the features the player wants, and marketing/brand/packaging, for a long time.

Brands only matter if there is some value to the brand.

People spend a lot for brands in music hardware because they know that brand cares and invests a lot into the quality of their product. It's not like a handbag where the value is primarily the status of owning something expensive (although there is obviously some of this too).

But if there's no real quality difference anymore people will rightfully ask why they'd pay the extra?

I think a more comparable example here might be SaaS products. People don't buy a branded SaaS product for the status of owning the brand. They just want to know if it will solve the problem they have. And if some AI competitor product can do that thing just as well either for free or half the price, then people won't spend what they used to for software like Photoshop.