I know they want to promote their new motors and it is probability good for the sport. Is not GMC directly in competition with their biggest motor buyer? Is that good business practice? Seems strange to me. What am I missing?

Mercury is obviously a big customer to GM Vortec, but Mercury is not GM's only customer. There is also Volvo Penta, Crusader and Indmar, just to name a few.
GM Vortec has a home run with the HP-3 8100, but for whatever reason, it seems that Mecury didn't want to buy it. So, Innovation Marine stepped up and began marinizing the HP-3 and will be offering it to the recreational buying public.
Since Mercury Racing offers everything up to their HP575sc with a full warranty Bravo drive, then I would assume that they would warranty the Bravo drive behind the GM Vortec HP-3 as well.
So, to answer your question, I guess you could say that it is Innovation Marine that is competing head to head with Mercury Racing. And GM Vortec just gained a new customer.

We are trying the HP3 in a Super Cat Light this year in POPRA. They are shipping the engines next week. The guys at GM are great and the Innovation people have been a lot of help. It appears to be a lot of work to convert the boat from Mercury to GM, I'll let you know if we make "race day" ready to go.

Good luck to you in the Great Lakes
MD