There are many frames that one can place upon this issue. They do not contradict the other. There are moral framings (stole the internet so go eff yourselves, is one), but so is national security, and so is the doomer recursive self improvement risk, and then there is the framing purely on what this implies for future AI training.

I mainly focus on the last.

It will be hard for a frontier lab to justify spending the compute and data curation needed to advance AI further if that expenditure can be assimilated into your competitor's products within months/weeks. So reality will present labs with three choices:

A. Cease spending massive amounts of money and compute improving those models.

B. make those improved models more difficult to distill from, either through some regulatory regime, or some technical solution, which seems unlikely to me.

C. making the best models available only to select partners and government.

In all these potential outcomes, China, which lacks compute that U.S. labs enjoy, will likely stop seeing massive improvements in their AI models. Improvements to be sure, but right now they are enjoying gains from distillation AND their own model innovations, and these potential outcomes would largely stop one of those sources.