The relationship between Bon and Tibetan Buddhism is one of the genuinely unsettled questions in Tibetan studies, and the honest position is to set out what is agreed and what is not.
Agreed: Zhangzhung existed as a polity in western Tibet and a Zhangzhung language is attested in surviving material, so Bon's geography is not fabricated. Pre-Buddhist Tibet certainly had its own ritual specialists, royal funerary practice and cults of local deities, documented in Dunhuang manuscripts and in the imperial records. And the organised, textual, monastic tradition calling itself Bon becomes visible in the historical record from the eleventh century, at the same time as the Buddhist renaissance in Tibet.
Disputed: whether the second grew out of the first. The eleventh-century tradition shares with Tibetan Buddhism its philosophical vocabulary, its structure of the path, its monastic rules, its logic and debate curriculum, and large stretches of literature that correspond text for text. Bon explains this by saying Buddhism took it from Bon. Older Western scholarship said the reverse and dismissed Bon as plagiarism. David Snellgrove, working with Bonpo scholars from the 1960s, argued for something more even-handed: an unorthodox but genuine Tibetan form of Buddhism, drawing on non-Indian sources and on indigenous material, developing in close and mutual exchange with the Buddhist schools rather than either preceding them cleanly or copying them.
Per Kvaerne made a distinction that resolves much of the confusion by separating three things the single word carries: the ritual practices of the pre-Buddhist period; the systematised Yungdrung Bon of the eleventh century onward; and the unsystematised local ritual found throughout the Himalaya, sometimes called the nameless religion, which is neither of the first two. Calling Bon simply "the pre-Buddhist religion of Tibet" collapses all three and is the most common error in general accounts.
There is also New Bon, developing from around the eighteenth century, which incorporates Padmasambhava and material shared with the Nyingma, and which Yungdrung Bon institutions treat with some reserve. Its existence shows that exchange between the traditions did not stop.