The words of the license are "You may not provide the software to third parties as a hosted or managed service, where the service provides users with access to any substantial set of the features or functionality of the software.".
I don't think competing with ElasticSearch is mentioned anywhere within the license. If team 1 uses ElasticSearch and team 2 is developing RAG (without using ES), then that's not an issue (but only if using the most recent version of ES, since the license for the code that I fork today has no bearing on future code that ES hasn't written yet).
This is why the proliferation of these custom licenses is yet another self-own by these companies. To HashiCorp, their own products are special unique flowers and deserve their own license, but to their customers, HashiCorp is just one of dozens or hundreds of vendors. Adding layers of confusion and risk to using their software is not going to encourage anyone to try it out.
I don't think competing with ElasticSearch is mentioned anywhere within the license. If team 1 uses ElasticSearch and team 2 is developing RAG (without using ES), then that's not an issue (but only if using the most recent version of ES, since the license for the code that I fork today has no bearing on future code that ES hasn't written yet).