As much as I agree with you according to my own principles, I would not underestimate the sacrifice-anything-for-profits side of the cost-benefit analysis that many businesses will perform.
The other answer: They've got somewhat of a "we know best" vibe going for them which also comes in play when you see their response to feature requests - e.g. for usernames instead of phone numbers or for "edit message" functionality like Telegram has.
The good answer isn't even a good argument.
The client is open source. People have forked it and used the Signal network. Signal asked them to stop and they did, but there is nothing stopping people from ignoring Signal's request in the future.
This has nothing to do with federation. Signal could federate their network and still request everybody use the official client.
https://en.m.wikipedia.org/wiki/Signal_Foundation#Signal_Mes...
(Of course employees and board members can still receive handsome compensation, but the same holds true for regular non-profits.)
Example: Suppose I bulk buy T-shirts printed with my cool logo for $15 each and I sell them to consumers for $50 each. That's a for-profit activity, if Walmart was allowed to have a "non-profit" arm which did this I'm sure they would, the tax saving would be considerable.
(And also extensively discussed elsewhere on HN already, if you want to dive into it some more.)
Plus yes Signal has a bit of an NIH complex.
Signal is more focused on 1:1 or small group chats. Federation there can be much simpler, more like email/xmpp than IRC.
It does still add friction and slows down youe development as upgrading is difficult.