Thank you for your question. I want to challenge your assumptions without sounding combative, and provide what I think is a solution that prevents the conflict from existing in the first place.

First of all I will point out that if one individual creates something useful and then a major service provider picks it up, this can mean very good things for society. If the service is good, hopefully AWS can provide it to many customers and help many people gain access to the utility this creative person has helped realize. There are situations where the big company disturbs the project so much it fails, but I assume you’re actually asking what happens when someone else profits off of your work.

Well in the theoretical I am also imagining that all parties share. This would mean that even if AWS takes on the code and sells cloud services with it, they would only be competing against other cloud providers who could provide an identical service. That is to say there is no one way source code exchange, it should be mutual. In this case, I would argue society only stands to gain from AWS entering the fray. It is a pure positive and not a dilemma directly.

Then there is the question of the individual. This one individual worked hard on something for five years and then a big company swooped in and took the profit they could have made. But if it is open source in my theoretical then anyone could have swooped in at any time, and the creator should have known that was a possibility. They never should have sunk more effort in to the project than they were comfortable with knowing an alternative provider could have taken over the market. That creative person should instead have joined groups of other engineers working on projects that people need. Perhaps they contribute to a project that eventually gets taken up by AWS, but it would not damage their livelihood as they would just shift focus to another.

We play by the rules we’re given. In a society where everyone shares, creative projects do not strictly belong to one individual. We would not make choices that exposed us to risks we did not in some way accept.

Some would say that without this person being willing to sink five years in to something for their own profit, they would never be creative and this would be a loss for society. But I don’t believe that. I’m two and a half years in to a project that I’ve licensed CC0 & BSD. Anyone could swoop in at any time and bring it to production, potentially earning great profit. And I would find it a great honor if someone did that. So you see, the creative drive exists outside of the need for profit.

As far as how people survive - there is a great deal of work that cannot be digitally duplicated. You can pirate a musicians albums but you can’t pirate a live show. In a world where there was no IP restrictions and we all shared, people would find income doing novel work, instead of duplicating something someone had already done. One good hack to this is to automatically provide for everyone. Universal basic services. Then there’s no starving artists.

Sidebar: IP laws are not strictly necessary to enforce this. You are not decent to your neighbor because the law requires it. If society values open source and collaboration and boycotts those who would use IP law selfishly, we can accomplish this all with no change in laws. Some kind of union system can help enforce these boycotts and formalize their terms. Though some laws do need to change to reduce the benefits of playing selfishly.