sorry, but I do not see any advantages in this particular project? how do you want to avoid competition? that your project was in demand?
I think they dont want to avoid competition but rather stay one step ahead.
A this stage it is very easy with all those initial users. Later on if some competition comes, which there probably will, they can offer new features and still stay ahead.
They are obviously in great advantage at this stage, if competition appears later I do not believe it will seriously hurt this project regarding the people in team who have been in similar projects for years