Found out friend was behind copy of my business, what now?

For background, I operate a business in a small-ish market. I saw an ad a few months ago for a business that appeared to be copying my business almost exactly--same specific niche in our small city, copying my advertising almost word for word, copying my exact Instagram posts, copying my TikToks, hiring the exact same individuals I hire (for reference, many of the people I hire don't live in the area and aren't well known, so it was not merely location related.) The only difference was it all appeared to be written by ChatGBT but based on my exact posts, like the prompt was something like "re-word this for my product."

It was nearly an exact imitation, minus taking anything like a logo. I saw a friend of mine had re-posted one of the other business's posts, and asked them if they knew who ran it. I didn't mention I was unhappy with it since I didn't know their relationship, and wanted to keep things neutral. They told me it was someone else they knew, and I didn't think much of it. I later found out that it was actually my friend who owns and runs it.

To be clear, I know this person relatively well, and if they had started a whole business they would have certainly told me. We were hanging out very often, and they would routinely ask me questions about my business. I'm pretty shocked.

I'm not interested in confronting them, since I feel it would only cause drama or possible retaliation given some of their other actions. Given to the extent of their lying, I feel we can't really be friends any longer. I also am not interested in legal action, in my eyes it is not really worth the headache. I assume they will just run out of steam eventually, as their business currently doesn't seem that successful. My only concern is that they could slightly divide the market, and that it could possibly cause some brand confusion. I am also not happy also that they've hired on literally every single one of my vendors, which is making my product less unique.

I cannot emphasize how exactly they copied every aspect of my business, but it's not like my practices are trademarked nor do I want to take legal action.

Has anyone had something like this happen? It is literally so bizarre?