What this ends up being in practice is "give away everything that I am better at than AWS for free, and charge for the things that AWS is better at than me." It shouldn't be surprising that AWS comes in and eats your lunch on this arrangement.
I actually don't disagree, but for certain software tools, the world would be a better place with their usage maximized. This matters because it improves the standard for everyone. The goal here is first to maximize tool usage, and then to worry about putting a dollar in my wallet. I understand, however, if investors can require a more business-friendly license than LGPL.
This doesn't work because competition and/or free usage become trivial.
This doesn't work always..
Nexedi and their product erp5 exist since like 2004 and are still going strong it seems, so it works. Maybe not at scale?