Only if your definition of capitalism includes a robust antitrust component (which mine does, but I know I differ from the mean here).
1. Prove you can do something amazing 2. Raise a bunch of capital to scale it, betting on future revenue 3. Deliver! Great product, stellar growth, soaring revenue, re-invest in product 4. Flood of copycat competitors, drives up acquisition costs, eliminates higher price point, revenue tanks 5. Pivot. Try to sell another story, build the start of another product leap, loose traction in a new way, pivot. 6. Seek an acquisition before the music ends 7. FTC
In other words, product development (esp. app + hardware) is expensive, difficult, and constantly changing.
We don’t have a capitalist system competing on product merit but acquisition arbitrage. In almost all cases the inferior product wins.
What happens if they get taken over by Amazon? Investors get a big exit, and employees hold on to their jobs for a bit longer (before the inevitable layoff). Amazon then uses its massive retail power to push an inferior product and edge out the smaller companies doing better work and competing on merit, leaving the space worse for everyone.