This has nothing to do with "caving".
It's all about business.
The market has decided that there's no reason to pay a premium for a Colt-made weapon when everyone else is capable of making parts of virtually the same quality.
Colt is simply choosing to not try to compete with the hundreds parts makers out there who make it possible to build a perfectly serviceable AR for ~$500.
On the plus side, this will make my pre-ban Gov't model more valuable.