The problem is the hypocrisy. They scrape, but don't want others to scrape them. If they act like they've been stolen from when they get scraped, that is a confession of guilt to when they did it themselves. They should be punished according to the same rules they wish to impose on others.
I really agree with this critique! It's very hard (without hiding behind ToS) to claim that creating the models was A-OK, but distilling them is some sort of ethical breach or attack.
That I can't argue with. "Distillation is theft" is one of the silliest and most hypocritical things uttered in any of the debates surrounding AI.