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Okay, so why don't you put your money where your mouth is and actually link to this competitor of yours you're talking about?
I cant mention that one in particular due to confidentiality but would love to point you others such as Tazo's topal, Rich Jones' gun.io, Sacha Grief's Folyo. you should visit all of them - they are great services!
There's a strategy I see very commonly deployed with open source software: you release your code as open source, knowing full well that competitors will come along and take business from you using your own software. And it works brilliantly.

Why does this make sense? Because as long as they are using your code, you are always going to be one step ahead, and always have a strategic advantage. As long as your marketing and other aspects are competent you only need to be slightly better to get the lions share of the business, and having a controlled but viable entity in second place will keep more competitors from entering the space.

I see a similar aspect to giving your competitors advice.

I actually did not think about this angle, but I agree it is brilliant. Knowing your competitors are using the software you gave away for free also gives your assurances they are a step behind! ha! I am a little giddy with excitement here :) such a good idea
My company's product was blatantly ripped off from concept to design to some actual text copy. We aren't too worried though (consult your lawyer if you want legal advice). They have signed some big clients but they're clearly offering an inferior product.

Competitors can help grow your market base (by getting people interested in products like yours) and offer a point of comparison during sales meetings. Oh, you've heard of X? That's excellent, because we offer Y which clearly offers your organization a greater value because...

exactly. Your competitor just help your shortcut the whole value prop conversation, so you can skip that pitch and go into why you are better. It saved you a cycle of story telling. that is good marketing!
I think you guys are in a unique situation where you have the power to let a copy cat pass or not pass. That doesn't happen to everyone. Not everyone owns the platform.