That potentially millions of 3rd party app users may leave has nothing but good consequences in their eyes (less resources spent on free users), and if even 1% of those convert to their 1st party apps or website that's a net gain for them
But the problem is those people are potential content creators. They are arguably more advanced users, and therefore more likely to create content. And that content drives engagement, which drives ads.
I think reddit may become what facebook has become. I still use fb for marketplace and niche hobby and local groups. I can see reddit going the same way. I wonder what tech they're going to throw all of their money at...