Most game studios I'm aware of would never pick the lead character designer as a public competition in the first place. That's just asking for interpersonal drama to turn toxic, even if it does generate excitement inside the studio.
Most of the time, in my experience, project leadership either knows who can do what the project needs or they just have multiple people do exploratory work until they find the right style and go from there. I don't have large studio experience, so some of this is also hearsay from friends.
The "pull you aside to let you know they're picking somebody else for the role" thing is VERY real though. It SUCKS but, like, it's also very important to communicate why they're going with somebody else and reassure about your role going forwards.