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I've heard the phrase that "Competition is good for business" but never in the context "Competition is good for open source"

You haven't followed the llvm/gcc saga then.

Linux vs FreeBsd?

Open vs Star Office?

kde vs gnome

python 2 vs 3?

Python 2 & 3 are developed/maintained by the same people. It's not really a competition.

Without Python 2 refugees Python 3 would never compromise.

One of these is not like the others.