“The market is merciless” is something a business should always keep in mind, at least when their existence isn’t guaranteed for some reason.

OP isn't talking about large businesses, they're talking about the hundreds of thousands of small businesses using WP Engine as a host.

Those small businesses are purchasing something from WP Engine. It's up to WP Engine to deliver, and it's ridiculous if a company that size fails to deliver because they were freeloading without having a backup plan in place. The fault is entirely on WP Engine (who sold the service) not Wordpress (who made no promises at all to WP Engine customers).

So it's okay for WordPress.org to damage a bunch of WordPress users because they're not customers of Automattic and therefore WordPress.org has no obligations to them?

It's this kind of blurring of lines between Automattic and the foundation that has people very very concerned here.

Yes it's OK. Free Software means that users have freedoms, not that the developer is obliged to provide them free services forever.

Got it. So Free Software means that the ostensibly-distinct foundation supporting the project can act to defend the interests of the for-profit entity run by the same person.

Yes, why not? If it's not something prohibited by the license, it is permitted.

Also, if open source companies wouldn't do it, some open source projects would never reach any kind of maturity if the company creating such project faces the competition who just live off the work of the original team who don't contribute back to the project.