The problem is that people don't care about freedom, security or privacy. If they cared, they would only choose software that gives them those things. They would use Free Software. Even when it's not always convenient.
So the issue here is not capitalism, but non-free proprietary software, because it makes it easy to abuse users. Unfortunately most people haven't even heard of Free Software. They don't realise that they deserve certain rights when using computers. I think if more people were familiar with the Free Software movement, they would think differently and they would demand freedom. Not all Lemmy users have heard of Free Software, but many of us understand that freedom is important. So we use it, even though it's not convenient and the UI sucks.
We are capable of competing with corporations and often making better software that them, but that's not enough. If people don't understand the issues we are trying to solve, they will just use whatever new shiny app that comes out next. That's why some Twitter users migrated to Bluesky and Threads. They don't understand that after a while they will be abused the same way as before.
Even if we make Matrix way better, Discord users will still use Discord, because to them everything is fine and there is no reason to switch. Learning to use something new is always inconvenient. I doubt that all Windows users are unable to switch to GNU/Linux. They just don't think it's worth the effort, because to them there is nothing wrong. Being spied on and restricted is ok as long as all their proprietary games work.