I genuinely don't know how any of these companies can make extreme profit for this reason. If a company makes a significantly better model, shouldn't it be able to explain how it's better to any competitor?

Google succeeded because it understood the web better than its competitors. I don't see how any of the players in this space could be so much better that they could take over the market. It seems like these companies will create commodities, which can be profitable, but also incredibly risky for early investors and don't make the profits that would be necessary to justify the evaluations of today.