The AI "arms race" as you put it is absolutely capitalism at its core. Replace humans with shitty robots so they don't have to continue paying wages to actual humans. Its just the the first person that makes it work will be able to set the rules for the ones that follow. Getting paid for those rules and making further entrenched in capitalism.
Yes. A huge difference between hallucinating incorrect information that was stolen from actual creators and using it to write incorrect information stolen from actual creators.
So, you jack up the price of games, hardware, and remove the PC option making it much harder for anyone to purchase your games?