I don’t think AWS is worried about that. If the small cloud provider competitor standardizes on their API, they’re already winning. It will be easier for you to migrate to AWS once you hit the ceiling of the competitor’s scale. That’s something you can’t copy out of the box (and the true AWS value proposition imo).

A DynamoDB that only runs on one machine won't help you build a DynamoDB that horizontally scales.

I think you massively underestimate how big AWS's moat is, and how hard it is for newcomers to effectively compete with them. AWS's ever-growing feature list is impressive, sure, but what customers are actually paying for is good customer service, high reliability, and most importantly, trust that AWS will be around for decades to come and that all infra issues become AWS's problem rather than their own.

Any serious competitor would have already invested the trivial amount of money required to gain full access to AWS to probe and test all their services.

This is my first thought when I saw this as well.