The profitability of a business is a testament to its sustainability (or lack thereof). Persisting unprofitable structures is inherently unsustainable - despite how valuable they may be to users.
If they wanted to make money, they could've charged an amount for the API that covered their costs and made them a profit. Or they could've required the apps to show their ads. Or they could've said that the free API access is now only for reddit gold subscribers. They're instead charging an amount for the API that clearly no app can afford, not negotiating at all, and locking nsfw content out of the API (it's already locked out of the mobile site).
The point is to lock down the users. Not profit, at least not right now.
Just as Devs are forced to resolve bugs in their code, business people should sort out the bugs in their balance sheet.
These decisions are being made now not due to profitability concerns, they're being made due to the lack of backlash from the tech community and laziness.
"Oh? Elon start charging extortionate rates for the heavily restricted API & Zuck gets away with throwing his legal weight around at OSS Devs and nobody bats an eye? Cool, we'll do the same thing!"