I think this is really it. Intra-gender competition is always a thing, but as a guy, you can definitely feel the testosterone raging through you and through others.
I also think guys tend to bond more over shared goals. How often do guys wax nostalgic over "army buddies", for example? And in Anglo-Saxon England, where femininity was basically a non-factor in most guys' lives, men drew SUPER close being on the battlefield with one another. You can read old epics and read of guys kissing one another on the cheek, exchanging emotion freely, etc. There's not much of a chance to connect in such a manner in the context of modernity, methinks, and that's the deeper issue.
I don't think it's a function of modernity; even as recently as the nineteenth century we can read accounts of male friendships that are emotionally intimate in such a way that they can be misread as homosexual. It is this conflation of masculinity with heterosexuality that took place over the early decades of the twentieth-century that I think is at the heart of this, if we're talking historically. As Chauncey explains in Gay New York: Gender, Urban Culture, and the Making of the Gay Male World, 1890-1940 (a magisterial work that completely transformed my understanding of pre-1960s American gay life when I first read it):
This book argues that in important respects the hetero-homosexual binarism, the sexual regime now hegemonic in American culture, is a stunningly recent creation. Particularly in working-class culture, homosexual behavior per se became the primary basis for the labeling and self-identification of men as "queer" only around the middle of the twentieth century; before then, most men were so labeled only if they displayed a much broader inversion of their ascribed gender status by assuming the sexual and other cultural roles ascribed to women. The abnormality (or "queerness") of the "fairy," that is, was defined as much by his "woman-like" character or "effeminacy" as his solicitations of male sexual partners; the "man" who responded to his solicitations - no matter how often - was not considered abnormal, a "homosexual," so long as he abided by masculine gender conventions. Indeed, the centrality of effeminacy to the representation of the "fairy" allowed many conventionally masculine men, especially unmarried men living in sex-segregated immigrant communities, to engage in extensive sexual activity with other men without risking stigmatization and the loss of their status as "normal men."
[...]
Heterosexuality had not become a precondition of gender normativity in early-twentieth-century working-class culture. Men had to be many things in order to achieve the status of "normal" men, but being "heterosexual" was not one of them.
[...]
In a culture in which becoming a fairy meant assuming the status of a woman or even a prostitute, many men, like the clerk, simply refused to do so. Some of them restricted themselves to the role of "trade," becoming the nominally "normal" partners of "queers" (although this did not account for most such men). Many others simply "did it," without naming it, freed from having to label themselves by the certainty that, at least, they were not fairies. But many men aware of sexual desires for other men, like the clerk, struggled to forge an alternative identity and cultural stance, one that would distinguish them from fairies and "normal" men alike. Even their efforts, however, were profoundly shaped by the cultural presumption that sexual desire for men was inherently a feminine desire. That presumption made the identity they sought to construct a queer one indeed: unwilling to become virtual women, they sought to remain men who nonetheless loved other men.
The efforts of such men marked the growing differentiation and isolation of sexuality from gender in middle-class American culture. Whereas fairies' desire for men was thought to follow inevitably from their gender persona, queers maintained that their desire for men revealed only their "sexuality" (their "homosexuality), a distinct domain of personality independent of gender. Their homosexuality, they argued, revealed nothing abnormal in their gender persona. The effort to forge a new kind of homosexual identity was predominantly a middle-class phenomenon, and the emergence of "homosexuals" in middle-class culture was inextricably linked to the emergence of "heterosexuals" in that culture as well. If many workingmen thought they demonstrated sexual virility by playing the "man's part" in sexual encounters with either women or men, normal middle-class men increasingly believed that their virility depended on their exclusive sexual interest in women. Even as queer men began to define their difference from other men on the basis of their homosexuality, "normal" men began to define their difference from queers on the basis of their renunciation of any sentiments or behavior that might be marked as homosexual. Only when they did so did "normal men" become "heterosexual men." As Jonathan Katz has suggested, heterosexuality was an invention of the late nineteenth century. The "heterosexual" and "homosexual" emerged in tandem at the turn of the century as powerful new ways of conceptualizing human sexual practices."
I see the shift you describe as being caused not by "modernity" in some abstract sense, but by modern conceptions of masculinity that discourage emotional openness between men, even as men say that they want precisely that. And I don't think that the intra-gender competition explanation makes sense here. I think this has, as the article states, this has more to do with popular conceptions of masculinity - homophobic bullying is simply a form of
gender policing when you get right down to it, and the move Way describes of boys going from embracing face-to-face style friendships when they are younger to shunning them as unimportant when they are in early adolescence seems to be a function of social processes that Pascoe describes. If this were caused by intra-gender competition, such as beginning to see other boys as possible competition for girls or increases in testosterone wrought by puberty, you wouldn't expect to see the sort of friendships that you described - the same sex emotional intimacy would start to end around the same time as it does now.
Interestingly I actually read an article recently about boys showing more emotional openness / vulnerability online, mostly through Facebook posts, and that these essentially public expressions of emotional openness were encouraged by girls (and presumably read by other guys as well) - but that the walls still came back up in school. I wish I'd saved it, because I can't find it right now.