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Reddit will not reverse its decision in my opinion. Obviously, they are in financial trouble and need money, become profitable, else this whole story would not have taken place this way.

Tech companies have collected massive amounts of user data for years, in hope that this something like "digital gold". Even though, that in time of collection, data was not yet very useful, advancing fields of big data and machine learning suggested future value of being in power of all this data. Up to a few years ago, personalized marketing was the main way to monetize this "digital gold", but in times of advancing large LLMs, which are trained at least partially by data scraped from social media APIs, this may change. Economically even worse performing twitter announced a similar change to their API pricing earlier, now Reddit jumps into the same boat.

However, the API is also used by third party app developers, which interfere with the "traditional" way to monetize user data: personalized ads. This makes them a good scapegoat to draw attention away from the real new API customer audience: LLM corporations. With AI being so hyped, I guess this is where the financial guys smell the big money. And the image of being a shitty, ad-money hungry company is pretty common these days, but being an AI training center is not and therefore more risky.

At the end, there is a third category of very relevant current API users: mod tools and bots, which are pretty important for quality/moderation of content. It will be really interesting to see the long term consequences of this category not having restricted or no access to API anymore. If moderators back down, who will replace them? What happens to content quality? Will reduced content quality infer with the expereience of the average joe?

Let's see! In some way, I just hope reddit fails, because I would like to see the fediverse grow more. Really love the idea!