WotC made Paizo into competition
That's highly debatable. How did they make Paizo into competition? By making a 4e of the game? Certainly things were done wrong. For instance, the OGL for 4e should have been done sooner.
However, I was at DDXP running preview events of 4e. I managed to listen into a conversation with Jason Buhman. Even while he was at the event having played 4e for maybe 8 hours or something he was already complaining to people about how it was a horrible game and how he planned on going back to the office to recommend to everyone there who hadn't yet played it that they should not support it at all.
Plus in his blog post later, he talked about it as well. He had been working on an informal 4e out of his house rules for the last 6 months to a year. He expected 4e to be very close to his house rules, figuring that if he saw the problems with 3e, obviously WOTC had and they would correct the exact same thing.
The problem is, I've played a bunch of Jason's adventures for Living Greyhawk. He pretty much rejoiced in the imbalance in the 3e rules. All of his adventures abused corner rules, templates, overpowered monsters, optimal combinations of monsters, and death traps with nearly no way to detect them.
When he was DMing games at a convention I was at in Australia, he was tallying a death count of how many PCs he killed running his adventure. The other DMs added their names to the list as sort of a competition. Which I remember was easily won by Jason. He had 15 or something. The next closest DM had 5.
He strikes me as exactly the sort of person who would look at 4e and think that it was way too tame due to the lack of save or dies or wild combinations of unexpected templates. I think it was inevitable that he wouldn't like it. And Paizo rather relied on him to make their decision on what direction to go in.
Certainly WOTC had the choice to release a 4e that was horribly broken like Pathfinder is. But I don't think that was a valid option.