Like Thiel, you're attempting to redefine the word competition. Facebook destroyed MySpace by competing with them. They competed by offering a superior service that attracted customers away. Amazon competed with book stores by offering a superior service.
They competed by innovating but that doesn't change the fact that they had to compete.
Facebook also incubated itself for a time in a space that MySpace didn't effectively own or control.
See Ha-Joon Chang's Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism for more on this.
"Chang blasts holes in the “World I s Flat” orthodoxy of T homas Friedman and other liberal economists who argue that only unfettered capitalism and wide-open international trade can lift struggling nations out of poverty. On the contrary, Chang shows, todays economic superpowers—from the U .S. to Britain to his native Korea—all attained prosperity by shameless protectionism and government intervention in industry."
I think Facebook beat Myspace on a few fronts. One, network effect of high quality groups to attract other groups. Two, spamming user's inbox in an enticing way. Three, clean user interface, although the side bars are cluttered now.
They competed by innovating but that doesn't change the fact that they had to compete.