I don't think the contention is that they will give up on these services, or publicly acknowledge that this is happening. A lot of AWS customers will be very happy with the native vendor services, it's just that the premium and corporate end of the market will go with more sophisticated ISV services. Also this is a forward looking prediction, it's happening in certain segments now, and will become prevalent in other segments over time. That's the claim anyway.
Take Elasticsearch for example, AWS is offering a clone service, but if you want the best Elasticsearch experience on the latest code base maybe you're better off using Elastic's own Elastic Cloud service that's also within AWS. If things play out as Erik predicts (and Elastic doesn't screw up) they should do just fine. We'll see if that's how it plays out.
Elasticsearch's cloud offering is a hot mess, didn't have a lot of confidence in how it was provisioned. We did a bake-off between ES Cloud, AWS Opensearch, and hosting our own cluster on AWS and the winner was... hosting our own (all things being equal we'd much rather go PaaS.) AWS Opensearch would have won out had it supported plugins which I understand they are working on.
Take Elasticsearch for example, AWS is offering a clone service, but if you want the best Elasticsearch experience on the latest code base maybe you're better off using Elastic's own Elastic Cloud service that's also within AWS. If things play out as Erik predicts (and Elastic doesn't screw up) they should do just fine. We'll see if that's how it plays out.