It's more about not spooking investors. If it's known that your AI is being used to reverse engineer software from well off corporations. They're going to be a little less likely to invest if 1: They're connected to any of those corporations 2: They're concerned about future lawsuits heading their way.
And of course the actual fear of potential lawsuits landing on their door, or being named in lawsuits against people using their AI to do this.
Yes, if you want control over AI you MUST host it yourself in reality.