It became a problem because it meant they were forced to bow down to advertisers instead of leaning into user funding. Discord has leaned into user funding very heavily, but I don’t know of any other social media that is more funded by its users than it is by ads and is regularly used/promoted, at least in the US.

Reddit requires moderators in order for the business of Reddit to function.

no they dont. they literally have a system to democratically promote or suppress posts.

Right, but you also can’t create a work agreement where one was explicitly denied. It’s like mowing your neighbors lawn then asking them to pay you, but they told you they wouldn’t pay you if you did it before you started. It’s the same with the 3rd party app devs too. While I think reddits actions are insane and detrimental to the health of the site, they are fully in their right to deny those devs access to their API and their site as a whole.

and reddit has it in their TOS that no one who is a mod is an employee of reddit.

they don’t have a contract, they’re screwed.

You can always trust a large cooperation to keep your data secret more than any random individuals. They have accountability for losing your data, much more so than the people on the fediverse. A big data breach leads to class action for reddit, here it just takes down an instance and lowers the validity of the technology.

The difference is that you can take reddit/Twitter/Facebook to court over violating your privacy, you won’t have anywhere near that kind of luck with fredeverse hosts. If you notice, there isn’t really a TOS, those are filled with regulatory agreements from governments that says what they can and can’t do with your data. Here we’re hanging with our ass in the breeze. Best solution right now if you want to receive DMs is to use an encrypted app and block all DMs here.