Except that makes no sense in terms of Embrace, Extend, and Extinguish. The only extending had nothing to do with RSS as a standard, it was keeping archives of feeds around for nearly forever. Everyone loved that feature and the UI, at least more than many of the competing feed readers, so they used it. That's exactly how you want things to compete in a market.
Which brings me to the next point: what market are you even talking about? There were never any profits in the RSS reader market. The only real market was one of interest by users, which Google Reader pretty legitimately competed in and still retained a large number of users (even if by "it's good enough to not bother switching").
There are still a ton of feed readers still around and still free (it's just consuming XML, after all). The ones that people are jumping to are the ones that have worked on their usability and are offering to take money to guarantee the feature that google didn't: storing feed history.
They have extinguished all the profits from the market as long as Reader existed.
Will that recommence? Perhaps, but there as a bit of the old Microsoft tactics at play here.