But more importantly, a discussion of "what could've been" is not really helpful to a discussion of what we should do today. I could equally argue that if users were more empowered than they are now, that you would see much higher levels of technical literacy and much more innovation. Do I have evidence to back that up? No, but neither do you.
I can give you more examples of free software that didn't have a proprietary counterpart, but I don't think that you really want such examples. You want to discuss an alternate universe where proprietary software doesn't exist.
> Would there be a Microsoft, Google or Apple or Facebook? No.
How on Earth could you possibly know that? You're possibly right that they wouldn't be identical to their current counterparts (they probably wouldn't be able to mistreat their users to the same extent), but those companies and those products might still exist.
Social networks existed before Facebook. Hand-held computers existed before Apple. Search engines existed before Google. Operating systems existed before Microsoft.
And I would claim that you have no evidence for such a statement. Given how much technical innovation happened in the hobbyist computer revolution that predated the "software revolution" (where proprietary software was unheard of) I would argue the opposite. But neither of us can possibly know what would've been in an alternate timeline.
But using that as an excuse to keep believing that "we could have gotten where we are only with Free Software" is a cop-out. We don't need to have an alternate timeline. We can think of our existing one as the (non-linear) superposition of two competing philosophies and their development: the hobbyist/academic/free one & the commercial/private/proprietary/profit-motive-based one on the other. We can surely come up with some kind of model to see how the "free economy" would fare if there was no "proprietary" agent.
You have said it yourself: there was a revolution going on, but it was only affecting the hobbyists, the enthusiasts. It took the "proprietary" side to exist to make it computing something as universal as it has become.
Without proprietary software, there would be no BSD 4.4, Linus would not have anything to clone for the PC, there would be no Free/Open/NetBSD, and so on.
Remove these from the "software economy" of today, and what would we have? Minix? HURD? "Innovative", alright. But certainly never able to compete with the proprietary (or proprietary-clones) alternatives at any point in time.
What I am arguing is simply that if proprietary software was forbidden, a lot of innovation would be restricted.
Imagine today if we were living in RMS world and everyone that writes software needed to have their software openly published and freely distributed. How many would simply not even start? Would there be a Microsoft, Google or Apple or Facebook? No. Who would be the big player that would have any interest in seeing the development of any technology that could threaten their business?
Most "innovation" would happen in academic settings, and it would never make the jump to any industry.