Hugging Face's internal storage system is more sophisticated now after they acquired XetHub. They have a clever way to chunk and content dedupe the data that makes it a lot more efficient to version control large files.
But in the era of frontier models and hardware designed for fast model loading (eg: LLM on a chip) I can't imagine that this is worth so much. There's *a lot* of competition to improve Git LFS.
So while I agree with you that this plays a role I also have to believe that it's to understand model usage by competition and thus stifle it.
You can't just spin up a VPS and throw a few brain jar's in; the network bandwidth must be a fortune. Hosting over 700GB+ for many of the same models has storage cost too.