I believe that this is and similar example are missing a very important point in the narrative: in case of developing land to build a building, you will still have the possibility to deduct 100% of the salaries of the construction workers.

Those construction workers will build the building (= the product) on top of the land that you acquired (another asset) which means you are assets become the land itself and the building. Land and building will have their own asset value (purchase price or evaluation) that will be used for over X years.

As far as I understand as an European watching this from abroad, they are trying to evaluate the value of the asset (= code, the product) of a startup by using development costs as a proxy.