Of course they compete even if they are the same company. For a game to be profitable it need to attract consumers if you take it from another of your product that not good. Even more reason to shut it down imo. Why bother create a new IP a new community and risking to loose big, when you can put resources on your other product that already have that.
I will play the devil advocate here, but a mmo in this economy ? Very little chance to succeed event if it’s good. I’m not saying canceling it was a good call, we will never know. But I can understand that being blow away is maybe not even enough for a live service to be good.