You seem to ignore the fact that open-source allows more people to use a product. When more people use it, more activity happens - which leads to evolution.
Not sure how you can ignore the open-source software that rules the software development world.
More people using a product does not lead to innovation. It leads to more people using the same free product and not realizing how much better their tools could be if they were willing to pay for them.
Open source tools rule the world simply because they are free, and developers everywhere are unwilling to pay for better tools, which hold back innovation of better tools. Why would anyone build a substantially better development tool if nobody will buy it?
Not sure how you can ignore the open-source software that rules the software development world.