TNO is something like semi-DARPA. It gets a lot of stuff tax free and a lot of gov funding, but a lot of their budget is from getting businesses to hire their R&D teams.

They do really good R&D on a lot of stuff. This is just their attempt at public credibility/internal skill building to enter the LLM business.

Doubt its going to be successful, but they "waste" a lot more money on other things that you never heard of. Its not fraud, its just R&D dressed up a little too much too early.

But why is "competing against remote SOTA models on quality" the only thing that matters here?

Targeting a niche audience with specific requirements is not fraud.