Only the originals are stored. Transcoding is needed to play any video in browsers, e.g. HEVC isn't supported by most browsers. For this, Memories transcodes your video on the fly and streams it to the browser with HLS. RAW support for photos is easy and already supported, no idea about videos.

As far as "beating" Apple, I'm ready to bet that'll never happen (not just with this project but any really). A small open source project can't really compete with a $2T company