It’s totally something they can do, but it seems short-sighted. They had to know that this wouldn’t actually stop the momentum around OpenTF, but just result in HashiCorp giving up the control they have over the canonical namespace.
As precedent, Docker allows Kubernetes and Podman to access its registry, for example.
Is it short-sighed? If you think they will go down in market share from now on, yes. But Hashicorp probably thinks it won't or it wouldn't have made the change in the first place. For them, it's all the way up from here.
Having to patch and maintain a complex piece of open source code yourself for most smaller non tech companies for all practical purposes means that it might as well be abandoned closed source code.
Folks are wise to question if they should use OSS that has a CLA assigning copyright because that means they should have zero expectations about the license not changing.