Spez has an ego problem and now he's in too deep.
He can't reverse course and admit defeat now, reddit will keep trying to strongarm mods because they have to win and show that they're in control and not their mods or their users. Ultimately they do have all the power and can ban everyone and remove all the mods and replace them, but it will damage the site. Spez doesn't care though, even if the entire site is burned to the ground, he'll have won. And he'll blame everyone else for his loss of IPO value.