The whole point of competition is to undercut the other guy, not necessarily to "be better". This is doubly true in the tech industry as a whole, where even non-digital goods and services are being undercut by a reluctance to regulate companies that have online infrastructure like Uber, Airbnb, etc.
When people say the EGS problem is a problem of capitalism, they mean that this is how capitalism works, and most industries have this problem; it's just that the EGS issue doesn't affect people who are too poor to complain this loudly to being with, since gaming is a hobby for the relatively privileged in comparison. It also means that the problem that EGS's existence highlights is not one that can be fixed by EGS ending or, by the same token, Steam ending.