Here are some reasons:
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exclusivity deals, forcing them to drop from steam even after they first announced release on there. They also target crowdfunded games like phoenixpoint.
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The launcher is spyware
https://forums.unrealengine.com/t/epic-launcher-and-privacy/123592
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and epic is owned by tencent 40%
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They not really trying to improve their launcher but instead focus on hurting steam and by extension the users.
Its like some shady guy trying to lure kids to a van by offering free candy.
The launcher is security risk for your system https://www.reddit.com/r/fuckepic/comments/1hm9mh9/epic_games_launcher_had_a_serious_security_flaw/
Even if they have fixed that specific issue, why would you believe they have fixed anything else?
first comment on the reddit thread
thlm 5mo ago
Epic Games Launcher Incorrect Default Permissions Local Privilege Escalation Vulnerability
CVSS SCORE
7.8
This vulnerability allows local attackers to escalate privileges on affected installations of Epic Games Launcher. An attacker must first obtain the ability to execute low-privileged code on the target system in order to exploit this vulnerability.
The specific flaw exists within the product installer. The product applies incorrect default permissions to a sensitive folder. An attacker can leverage this vulnerability to escalate privileges and execute arbitrary code in the context of SYSTEM.
DISCLOSURE TIMELINE
2024-07-16 - Vulnerability reported to vendor
2024-12-04 - Coordinated public release of advisory
2024-12-06 - Advisory Updated
That timeline is disgusting
So in essence, its not bad because it trys to compete with steam. Its bad because they really dont try to compete and just do anti-user things. And people dont care because "yay free games I'm never going to look at again".
If you want to see what actual competition looks like at the moment, take a look at GOG.