This disregards the fundamental reason why people buy index funds in the first place. Rules for consistent GAAP profitability and cooldown periods specifically prevent retail investors from being exposed to particular malicious stock market tactics and overall risks that otherwise could significantly hurt them in the short term. So it's more like saying "you don't like extra risk? too bad."
Yes, if someone thinks that the top 500 companies include too much risk then yes too bad, you need to move out of SPY.
It isn't called the S&P495 because they kick out 5 of the biggest companies that some people consider to be risky.
I personally think its super risky to want to be Diversified and NOT include any exposure to SpaceX. Yes, Elon is unique but that doesn't mean his companies are going to fail especially given the potential risk of AI changing the world. Is IBM going to keep selling overpriced IT outsourcing in 5 years?