Oh come on people. Spec work isn't good, but why complain about it, unless you stand to lose business because some college students with too much time on their hands make something that steals your lunch?
Because this kind of thing is actually really bad for the industry
right now. This isn't just spec work, it's really underhandedly unfair spec work that is notable for how bad it screws with would-be developers.
The entire game industry is going through a sort of mid-life crisis at the moment, with intense levels of distrust going on between publishers, developers and would-be developers. There's always been a fair amount of animosity between pubs and devs, but thanks to a lot of bad decisions (poor project management, corporate bloat, bad timelines in the first place) by a lot of people, we're actually seeing a lot of pub-dev relationships get completely destroyed over rights issues, royalty issues, and mandated crunch time. I see major developers complaining loudly about publishers all the time, and vice-versa.
It's one of the reasons why Double Fine's Kickstarter got hailed as the practical second coming of game development despite anyone with half a brain and 5 minutes realizing that it wasn't. It's one of the reasons why a lot of companies are losing people to other industries, despite the game industry's fairly ridiculous growth. The general relationship is that poisonous.
The game industry needs publishers. Maybe they need to re-structure and re-tune their precise business model, but putting out a game takes a lot of work outside coding. Not everyone is Notch (and he made games for years before Minecraft became a success). Would-be developers need to not be scared of working with pubs, and developers need to not all have horror stories about how badly they got screwed over.
The game industry also needs developers, not just coding monkeys who sit in a room somewhere, but folks who are really out to make fun, engrossing, occasionally amazing experiences. The pubs really won't be able to survive without it. Devs are the real talent in the industry.
So when a pub trots out a concept as ludicrously tone-deaf to the current worries of the talent as this contest of Atari's, I genuinely worry about the future development environment they're fostering. 'Cause it's already pretty bad.