Open source gains from model assistance more than closed source.
> If there were some way to truly get the benefits of certain applications without centralizing on the cloud, that would be interesting.
Apps can be decentralized and on the cloud at the same time, open source and LLMs make it easier for smaller cloud providers to compete with the big ones. Also, open source can gain the most from diverse deployment options because there's no concern about piracy.
In short, contrary to the OP, now is the golden age of open source, maintenance becomes easier, bugs can be quickly squashed, deployment options galore. For some apps, like LLMs themselves, open source is the only safe option.
BTW, the OP is very confused about the "photopea incident", photopea is a closed source JS app, as much as JS can be closed source. The problem with photopea's author is the use JS instead of obfuscated emscripten or wasm, he also requested the wrong kind of takedown - one of the problems of closed source is that protecting it can become a hassle, especially for individuals and smaller companies in the age of LLMs - for them, it might not be worth the trouble anymore.
At some point, you are paying rent to someone though, if you don't own the hardware. Tailscale only works because the broader Internet works and does routing. if you somehow displaced all the cloud services and solved auth,legal issues, etc. in a distributed efficient manner, I don't think that would remove the raw amount of bytes that needs to travel over the network. So maybe at that point "having an Internet connection" might be way more expensive, but the software itself is local? I don't know.