or giant corps will treat such startups as marketplace app creators for their LLM API and kinda "outsource" the innovation, while providing the platform and enjoying API income?
That’s assuming there is API income to be had. Assuming the “We Have No Moat” memo is accurate, the open source models may soon catch up to GPT4-level performance—and especially if inference compute requirements drop to consumer-level specs, there won’t be any money on the table.