That's not just bad in the OGL context--it's bad in any business context. Smart businesses look for opportunities and points of differentiation--they don't attack their competition's strengths (unless they're in a position to really win). When consumers already have good, solid choices in one product category, why pile on to that category when the need for a different type of product is unfulfilled?
Which brings me to why this is still relevant: Lots of people have observed that the GSL is designed to let WotC "regain" control of their brand and IP. That's nonsense--control of the D&D brand and IP has never been under threat. What WotC wants to do (in my no-longer-an-insider opinion) is put some controls on the market; in particular, to only open D&D compatibility to 3PPs who make products that complement (rather than compete with) WotC's products.
So WotC changed the terms of 3PP compatibility with D&D, and made it more restrictive. Insofar as it controls the glut and keeps 3PP focused on products that players actually want and don't get (or don't get enough of) from WotC, more restrictive is good for the RPG business as a whole, it's good for WotC, and frankly it's good for the third-party publishers. And if it also means that a relatively small number of 3PP participate (currently 3 to 5, as opposed to hundreds under the OGL), so that the choices offered to consumers and retailers are relatively narrow but desirable, so much the better.
(Whether WotC did this well is not part of my argument; I leave that to a different discussion.)
(A side note: When I generalize about the behavior of 3PPs, I am, of course, generalizing. Obviously there are exceptions; I'm not pointing any fingers at specific companies. Offender or innocent: you know who you are (and odds are it's reflected in your level of success).)
(Hi, Nik!)