There is only one program available in a very niche category of desktop software. It's non-FLOSS and does not have some features that I need. I made my own version that has all the features of the existing software plus some additional features that the users of the existing software have been requesting for 10+ years. I want to release my program free in cost and GPL, and expect a lot of users to migrate to my software. Thing is, from the looks of it, the current program's business is one dev, one designer, and one customer support rep. I'm not trying to start a business and would feel bad if I released my program for free because it could effectively kill their company. Would releasing my software as free in cost be unethical?
Consider, for a moment, a camp for the "re-education" of political prisoners, otherwise-innocent critics of the current repressive regime. A revolution happens, an enlightened regime comes to power, and the camp is closed. All the guards, administrators, cooks, and carpenters lose their jobs. Is this of net benefit to society, or is it a net loss? Please note that I'm not equating writing proprietary software to running a prison camp, I'm merely noting that more analysis is required than someone lost their job.
Free software is generally thought of as a net gain to society, principally because it empowers its users (to use the software as they wish, to share it without fear, to improve it to better suit their needs, and to share the improved version). It is true that free software restricts the programmer's ability to get paid, but it does so by removing the whip hand that proprietary rightsholders exert over their users: pay me what I demand, or you cannot use the software. Stallman, in the GNU manifesto, addressed the issue of programmers getting paid in a free software world when he wrote:
I could answer that nobody is forced to be a programmer. Most of us cannot manage to get any money for standing on the street and making faces. But we are not, as a result, condemned to spend our lives standing on the street making faces, and starving. We do something else.
But that is the wrong answer because it accepts the questioner's implicit assumption: that without ownership of software, programmers cannot possibly be paid a cent. Supposedly it is all or nothing.
The real reason programmers will not starve is that it will still be possible for them to get paid for programming [...] Probably programming will not be as lucrative on the new basis as it is now. But that is not an argument against the change.
If you release your software as zero-cost proprietary software, that is arguably dumping, and will in the long run probably not help all that many people. But if you release it as free software, the users will be empowered. Some will likely continue to use the proprietary version, but they'll do so out of choice, because it offers them tangible benefits. If your version is successful, more users may be willing to pay for support than you can provide; it is possible that the old vendor's programmer, who probably knows more about coding this task than anyone besides you, will step into that breach, and make a nice living out of servicing a need. It's possible whole new industries will spring up around your code. You won't know until you try.