What's the incentive though? That approximately zero user would ever pay for a social media or messaging app? I think they simply have no other viable business model whatsoever.
The largest player in social wants to normalize free service and lock-in: this way its users can come but can hardly leave, competition is impossible since no one can undercut it on price, and its leverage with the advertiser approaches infinity.
Now, the moment big social is legally obligated to enable feature-complete third-party clients to exist so that users can easily switch social service providers, a company will pop up and say “we don’t make money from advertising; we’re very transparent about all our records; we provide a full API so you can keep using your favourite client app; our subscription starts at $X”. You can count that this new provider will tear out a chunk of WhatsApp’s user base.
The next day yet another provider pops up and advertises cheaper subscriptions at $X/2, further eating away at Facebook’s advertising power. FB understands that the earlier it revamps its business model, the more revenue it can generate from actually paying users; so it revises the ToS, adds paid tiers to its services and becomes very good at upselling them.
Facebook will exploit paying users even more, since a demonstrable willingness to pay makes you a more valuable set of eyeballs for advertising. That’s the fly in the ointment.
And remember, they would pretty much lose the ability to show ads (where mined data is used for targeting), since getting rid of them becomes as easy as switching to another client.
> Not all software needs to rake in billions. Federation allows services and networks like the Fediverse and XMPP to scale up to large numbers of users without forcing a single behemoth to sell its soul to foot the bill. Although anti-domestication business models are less profitable, they still allow the creation of the same technologies that were enabled by user domestication. All that’s missing is an advertising budget; the biggest advertising some of these projects get is long unpaid blog posts.
Instead of building a platform that requires one actor to scale up to millions of users, build a platform that's simple enough for it to require less development effort and scale to only a few hundred/thousand users per federated server. Delegate hosting to the 0.05% of users willing and technical enough to run a server.
The Fediverse has scaled to millions of users with a grand total of $0.00 VC money.
Related: when people first envisioned the ideas that led to networks like the Web, sceptics would ask questions such as "Who's going to pay to make all those hyperlinks? What's the financial incentive to upload a document?"
If a system is designed right, there doesn't need to be a financial incentive (i.e., an ROI) to grow.