You're looking at the wrong end. He's saying that companies compete with each other and try to undercut one another, which allows some smaller companies to solve the problems allowed by the larger companies. These smaller companies rely on a problem still, but a smaller one (to convince people to switch, and thus get income, it must be smaller).
And you're talking about something totally different as far as I can tell, so it's not a very good critique of his point.
You don't need capitalism to have what you just described. When people bundle economic and social principles together that's when capitalism turns into what I described because under the banner of capitalism politicians refuse any social policy that runs counter to free market principles. In fact half of capitol hill has made this their battle cry.
And you're talking about something totally different as far as I can tell, so it's not a very good critique of his point.