The reason local models hasn't caught on is several fold. It's marketing to say your company follows the latest trend, and there's an inherent pressure to keep AI companies afloat so the economy doesn't entirely collapse. The other is, it wasn't until the last month that these models have caught up to frontier models. They just did, and they are more efficient and don't require a team of 500 to deploy.
Maybe in a world where these AI companies behaved with some semblance of ethics and user-friendliness they would be on even ground, but for anyone paying attention local models are obviously the future.
Because of nonexistent regulation. Just wait for it…
The legal situation in for example the EU is crystal clear, only that it will take some time to go though all court instances.
Even with overhead and scaling for peak use and a large profit margin, any company with an ounce of competition will be vastly cheaper than self-hosting. And for models you can run yourself, there will be plenty of competition.