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Yes, I think so. Like I said, it is not exactly executed like I would've done it. However, I am worried about the edge they already have in terms of being in the market already. Since it is a market with strong network effects (like many web apps) it will be hard to convince existing users to change services.

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There are many ways for a market leader to lose ground to a competitor - I am witnessing one of those at the moment, with one of the services I use. You can compete on features, you can compete on aesthetics, you can compete on customer service, you can carve up the niche... the list goes on.

What you can't do is expect other people not to have the same idea - whether you get first to market or not. If that was your only plan, it wouldn't have worked out anyway.

The advice already given here is good - if you believe you can be a 'google' the their 'altavista' then your new competitor is an important validation & valuable testlab for your idea - go for it. BUT as others have noted, that depends on your market etc. Good luck.

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