Google Reader killed the RSS reader market by offering a solid product for free. You can't use the lack of other options as proof of anything except the depth of Google's pockets.
I'm not the original poster, so I can't say what he might mean by that.
But in my view, Reader's arc is a sign of their growing indifference to open standards and a love of walled gardens. Well, their walled garden.
My impression is that Reader was launched back in the days when they were just doing things for the fun of it. If a 20% time project does well, then you push it out. And then they cared about open standards, which is why you can OPML-export your reader subscriptions.
But even at the time they didn't think much about crushing the nascent RSS-reader market. The programmers wanted to build things, so they did. And they liked them to be open, so that's how they ended up.
In the last few years, though, they've shifted. Google Plus was a sign that the power shifted from the nerds to the suits. The suits see what Facebook has and want the same. In that period, they just neglected Reader to death. I doubt it was intentional, but they it suited their walled garden urges just fine.
Now they've killed it, because it doesn't even do that anymore. As many people have noted, RSS has lost a lot of ground to proprietary sharing. Will it make it back? Would it have lost it anyhow? Hard to say. But a big part of why it's hard to say is Google's dominance.
So trying to answer your last question as framed, I guess I'd say that the harm to open standards happened at launch and up until when they killed it. The announcement kicked off a bunch of innovation and interest in newsreaders, and I'm looking forward to seeing how that plays out.
