This reminds me of a bit of an epiphany I had back in University. At the time, groups in our class were playing some sort of national business simulation game. I was sure that I had optimized my business to produce the 'best' widget at the lowest cost in a market dominated by other high quality widgets. Week after week, my business' position grew worse.
Finally, I spoke to my teacher who had a very simple message (paraphrased, it was ~7 years ago):
"Its not about having the best product, its about finding the untapped segment of the market," he said.
After that, I reoriented my business to attack a segment of the virtual market that was not being heavily targeted. That very week, my company made a complete turn-around.
In other words, I created a product that was well adapted for a specific segment of the market.
In the context of the linked article, I think the message is that there is an equilibrium between value provided by a service and the price at which people are willing to pay. If your product is worth more to your users than you are charging them, then you have not optimized this equilibrium.
Now, IF you are able to offer your service at a cost that is significantly lower than what your target customers are willing to pay, there is a strong likelihood that competition may try and capture some of this margin.
This does not at all violate the equilibrium principle because as new, lower-cost providers arrive, the price-point for users will naturally be lowered.