I do think that this has the effect of locking customers into Cloudflare's geoip data, which seems a little sketchy. The operator of archive.is claims that the data itself is bad[1] but I can't speak to his biases or motivations.
If the data is incomplete or bad, then you gain an advantage by using Cloudflare's services over rolling your own or using a competitor if a large number of customers are using their DNS, so I think the original point does stand. And if you are a competitor, your ability to compete with greater edge capacity or more targeted edge capacity is nonexistent.
[1] https://twitter.com/archiveis/status/1018691421182791680