Embedding is poor man's context length increase. It essentially increases your context length but with loss.

There is a cost argument to make still, embedding-based approach will be cheaper and faster, but worse result than full text.

That being said, I don't see how those embedding startups compete with OpenAI, no one will be able to offer better embedding than OpenAI itself. It is hardly a convincing business.

The elephant in the room is the open source models aren't able to match up to OpenAI models, and it is qualitative, not quantitive.