They’ve beefed with a few other instances they tried federating with too such as Lemmy.ee and lemmy.blahaj.zone. Their user base tends to be a bit more abrasive than most Lemmy instances, making federation controversial even among similarly minded instances such as lemmy.blahaj.zone
Reddit’s decision about 3rd party apps and API changes actually made business sense. Not only was their content being pilfered on Reddit’s expense, but a decent portion of their user base were using 3rd party apps that didn’t collect as much data nor serve Reddit ads like the official app. At the expense of losing a decent portion of their community, moderators, and any goodwill their userbase had towards them, Reddit now has all their mobile users on a single, add ridden app that they own and can collect as much data as they want going forward as well as ensures that they get paid for AI API usage