PokéBase - Pokémon Q&A
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If my ally with Cotton Down is hit by an opponent, would the resulting speed reduction that gets applied to all active Pokemon (including me) activate my Defiant/Competitive?

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> When a Pokémon with Cotton Down is hit by an attack, it lowers the attacker's Speed.

I think it only lowers the attackers speed not everyone in battle
The description on here (Pokémon DB) says what you just said, but it's actually incorrect. I've tested it in SwSh, but since I don't have a replay to share (since it's console) all I can do is reference Bulbapedia and say go try it out yourself: https://m.bulbapedia.bulbagarden.net/wiki/Cotton_Down_(Ability)
Going on list of minor site errors then

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Defiant will not activate if the Pokémon with this Ability lowers its own stats (such as with Close Combat) or if its stats are lowered by an ally.

This is also true for Competitive.

Since your ally Pokémon will be lowering your speed, Defiant and/or Competitive will not activate.

Source

Also, here is a replay showing the interaction.

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