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What is an "illegal" distillation? Terms of service are not laws, and clearly copyright laws are no barriers to developing AI models.

Yeah, I think we're learning that we overestimated the relevance of recursive self-improvement in a singularity/intelligence takeoff scenario. We thought that once an AI could start improving itself, it would cause an exponential, self-reinforcing intelligence explosion.

Turns out that scaling up compute is much more important and also limits the upper end of intelligence.

The bigger mistake is assuming it would be better at everything all at once.

Suppose it can do 80% of what the 20th percentile human can do. That's a huge advance and very useful, but it means there are still things it's not very good at. If any of those things is (or becomes) a bottleneck, you're not getting the hockey stick graph.

Why would the creator of AGI sell it to anyone, when they could keep it to themselves and corner dozens of markets?

If AGI = Data from Star Trek, it would be a huge leap. Frankly, anything less I wouldn’t consider as AGI.