The LoS&D is always in play. In this case, entrepreneurs are always looking for a higher margin business. The effect of this is to lower those margins.

Nothing "crazy" about it.

The "unintended side effects" of government policies are nearly always the result of ignoring the LoS&D or pretending it doesn't exist.

The amount of things the "law" of supply and demand predicts is literally zero.

You obey it yourself. Have you ever bought anything that was on sale? Have you ever negotiated a price?

A "law" that predicts nothing? Yeah, pretty sure I obey it exactly.

Supply and demand is a framework you can use to write your hypothesis in. It's not a law that predicts things.