In general, I agree with you.

However, in the case of model providers, I think it is a more real concern since it could make it into some training data, and then one of your actual competitors could ask the model to code something up and get your IP.

I sort of assume the frontier AI labs are good about not doing this when they promise not to, but if you don't have airtight restrictions on what your devs are doing, they might be sending it somewhere that hasn't agreed....