There's a difference between creating a market for something better, so that nobody wants the old thing, and competing _in_ the market for the old thing by copying it directly.
It's like saying "toaster oven/air fryer combos" don't actually compete with toaster ovens or air fryers because they are creating a market for something better
Of course they complete.
Toaster ovens compete with toasters. Microwaves compete with toaster ovens.
Just because it's not the exact same product doesn't mean it's not competing
Would I be allowed to steal LG's designs for a microwave and make a "superwave" that does laundry and heats food? Would you claim those products don't compete because the superwave is "something better"?
Which is in a few jurisdictions, or at least is not prosecuted if it's for personal use. Also, according to your definition, the creator of uBlock Origin or any other adblock system should be sued in the same way, because they are depriving $ADS_CORP of their precious impressions.
i dont think the actual copyright owners care, given they put their content onto a vaguely public view where they aim to get the most traffic to something else they are doing