I have no way of verifying this, but clearly the money is going somewhere and it's not publishing.
>It's basically how publishing would work if academics take control away from commercial publishers
arxiv is closer to how publishing would or should work if academics were entirely in charge. Publishing only entails putting a pdf up. All the peer review process is orthogonal which is done for free by everyone involved.
>Authors generally have the option to keep the copyright of the papers when publishing for ACM, and at least host the papers on their homepages.
You do not retain the copyright, and the only permission you get is to share it for classroom use with some other constraints. Authors posting them on their university websites is a grey area that is likely non compliant but it would be really bad PR for ACM to go after such instances. More recently, ACM has started allowing authors to pay some exorbitant fee to make the paper open access.
>This is a good thing that they dominate CS/EE as they have more reasonable access costs
Actually, there isn't really a big difference between the access costs. For most of the world, it's infinite. It doesn't matter if Elsevier is trying to charge $100 for a paper and ACM is trying to charge $30. Or what deals they make with libraries. It's all infinite for anyone not affiliated with a university in a western country.
>It's not completely free because there are real costs to publishing
The amortized cost of putting a pdf on the internet is close to 0. This is already true with arxiv. And even if you do not want to use arxiv, a static website with s3 or the new cloudflare equivalent will cost pennies per pdf.