[1] To use Thiel's terminology, it matters how quickly the market moves back into equillibrium, and that is dictated by the same forces that give rise to static monopolies.
Distinguishing between "good" and "bad" monopolies is sufficiently complex to deserve more in-depth exploration. Thiel is smart enough to realize that which is why I consider his point to be misquoted. Unfortunately, his view is oversimplified so as to be readily consumed and debated.
He lists characteristics of a monopoly in his book: proprietary tech, network effects, economies of scale, and branding. First mover advantage is mentioned as a "tactic, not a goal" - a chapter is even called "Last Mover Advantage." Google, for one, was clearly not a first mover in the search space.
I'm pretty sure we all agree that standard oil and internet explorer were not of great benefit to society.
- We want competition because it allows nefarious monopolies (and other companies) to be overtaken by better companies.
- We don't want to discourage companies from attempting to obtain monopolies in their markets, since this gives them to opportunity to capture monopoly profits. Monopoly profits are not inherently bad. If a company becomes a monopoly, we want them to be a creative monopoly.
- A competitive market in the sense of having low profit margins is very different from a competitive market in the sense of whether or not new entrants can come in and compete.
- It is a bad thing if a company has monopoly power through something other than being a superior company, is capable of preventing new entrants, and is uncreative. We want to preserve the ability of new entrants to come into the market with superior products and overtake monopolies.
(edit: formatting)