Would it be fair to say that diversification of a portfolio is only advantageous when there are relatively few others diversifying as well? Or is it an issue o

Would it be fair to say that diversification of a portfolio is only advantageous when there are relatively few others diversifying as well? Or is it an issue of inequality - too few investing firms owning/managing too many assets? Are the markets just so efficient that assets that once had clearly distinct risk/reward profiles are now blending together?