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Ex-Apollo/Reddit 10+ years here. I really can’t understand why they didn’t offer API users the ability to pay for the add-free access they were afforded by their apps (if that’s what it was supposed to be about). Did they really think that they could force people to use the dumpster-fire that is the official Reddit app? ..at the cost of losing a significant, or at least active, percentage of their user base? That’s insane. I haven’t logged in to my Reddit account since and I no longer visit old.reddit.com. Appreciate going cold turkey isn’t for everyone, but … fuck it. When social media companies stop allowing you to view their content in the way you enjoy, it should tell you how valued you are by them.
It's fairly simple: a social media platform's value isn't just a matter of income but also of potential income and how well it can control its users behavior. Preventing users from curating their experience creates more potential avenues for advertising.
What advertisers want are eyeballs (and user data to better their strategies). The API being open means Reddit can't control where all the eyeballs on their platform are looking, which reduces the value of Reddit.
What advertisers want from reddit, and what will increase reddit's valuation, is for reddit to say "We can control where 100% of our user's eyeballs are and what they're looking at 100% of the time". For example, that's why the Facebook feed straight up ignores your settings and shows you whatever it wants.
The API access could make them money but not nearly as much as as they'll make by demonstrating to advertisers how much control over the user experience they have.