Correct me if I'm wrong, but isn't the idea of an internship about learning, not about producing? If your producing for the company something they are selling (or creating net value), don't you have to get paid? I mean, people here are talking about actually working on projects the company is earning money for. That's not an internship. Am I clueless, or are other people just ignorant?
Are you making a moral argument, or a legal one? If legal, what country? The "idea of an internship" is experience and networking if you're the intern, recruiting if you're a smart company, and free/cheap labor if you're a dumb company.
"Among those criteria are that the internship should be similar to the training given in a vocational school or academic institution, that the intern does not displace regular paid workers and that the employer 'derives no immediate advantage' from the intern’s activities [. . .]" https://www.nytimes.com/2010/04/03/business/03intern.html