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I expect the latter will be the likely long term outcome. We already saw Microsoft try to kill Linux in the early 2000s, it was a very similar scenario. MS had a software empire where they were charging absurd licenses for windows servers, and then Linux comes in and all of a sudden people start using open source. And MS literally tried to make open source illegal, eventually they lost and now nobody runs windows on servers anymore, but MS does host giant Linux server farms.
I expect the latter will be the likely long term outcome. We already saw Microsoft try to kill Linux in the early 2000s, it was a very similar scenario. MS had a software empire where they were charging absurd licenses for windows servers, and then Linux comes in and all of a sudden people start using open source. And MS literally tried to make open source illegal, eventually they lost and now nobody runs windows on servers anymore, but MS does host giant Linux server farms.