I also think it's an odd decision now that they're exposing view count to users. Driving away users on third party clients will cause that number to drop.
We don't have any hard numbers but I'm curious why you think network effects would apply here.
Twitter's audience is not the same as it was 10 years ago, when the tech/tech-adjacent Twitter audience made a huge fuss over API access, and they were probably generating close to a majority of the content at that time.
I think it's likely this group is too small to matter now.
I agree that Elon doesn't care, but he probably should care that heavy users like me can be so quickly and easily lost. And in addition to being more bad PR, 3rd party developers will interpret this as a clear signal not to invest much in integrating with Twitter.
Despite the APIs bringing in some money, I doubt they've covered the ad revenue loss, especially in recent years as more and more advertisers started using Twitter at scale, and as more of the world joined Twitter.
The audience using these APIs via Tweetbot, Twitterific, etc, has become an ever smaller percentage of Twitter's userbase. It's probably not even worth the effort to figure out how to better monetize the APIs, given the small audience.
And not everyone is so desperate to avoid the algo timeline that they're willing to pay a 3rd party app.
Personally, I was a Tweetbot user from around 2013 to 2018, but I kept switching over to the first party app more and more, as Twitter started to add more features that weren't available to Tweetbot. And then I discovered I was spending all my time in the first party app anyway because of the algo timeline, so I quit using Tweetbot.
My twitter usage is so fine tuned to tweetbot, that I'm also just a lost user. I miss some of the people I followed, but it's fine. I have no interest in using the official twitter app.
It's back to RSS feeds for me, which I find fill a similar niche to twitter.