The reason usually revolves around data and advertising. In Reddit’s case, they do not gain any advertising revenue from 3rd party app users since they are not delivering ads; they also do not collect any kind of usage data/metrics on 3rd party app users such as post linger time, time of use patterns, any amount of data outside the app it mines for (because the Reddit app sure mines a fucking lot). The API is effectively opaque to all that, and it sort of has to be, because there is no standard of display or data handling on the 3rd party’s end that reddit could rely on to actually be feeding them trustworthy data- if they collected any of this from a 3rd party, all data they collect would become trash, because there is no way to verify the endpoint collection.

So, ultimately; Their platforms cannot be as effectively monetized unless they have excruciatingly minute control over every tiny aspect of the platform’s layout, display, and data collection to maximize ad space and increase user interaction, linger time, and click rate. Late stage capitalism tells them this is absolutely unacceptable for shareholders, so they must eliminate the waste and consolidate control. Interest rates have jumped, the “free money” policy is over, and the investor-leech hawks are closing in- the “open” centralized internet filled with free, effective services will be dead within another couple years.