Arguably the town is at fault for choosing to permit Walmart to open in their town in that analogy. If you want to control the negative externalities of capitalism you can't just expect to not provide regulations and hope things will work out.

Even if it weren't AWS, someone else with enough determination could use the same open source code to create a compelling alternative taking away business from the original authors. Trying to use social norms to make people not do that is not effective. You need mechanisms that can be enforced via legal procedures to be effective.