I definitely agree that Amazon, Azure and Google are squeezing the OSS vendors and other SAAS providers by offering their own hosted options. From experience, I know that it's possible to still compete with the large cloud vendors, so I don't think that they're necessarily an existential threat to OSS businesses. But if you're a VC-backed company watching your valuation and your investors are expecting a 100x return, I think that cloud vendors jumping into your market makes the big investor payday a lot less likely. And if you want to compete in the SAAS market your company needs to get really good at the managed hosting business.
IANAL, but if all options are on the table is it possible to have a modified OSS license that would exclude 'hyperscale' cloud vendors from offering a hosted version?