Imagine some strange dude called Apollo walking into a massage salon and starts giving massages while keeping all the money he makes for himself. Apollo is essentially competing against the massage salon while making use of the facilities of the massage salon for free.
And if that massage salon starts charging this strange dude Apollo based on his usage of the massage salon, the internet wants to burn down this massage salon.
Not really equivilent. Reddit (massage salon) still gets the data and engagement, which is remarkably valuable to them in their IPO objectives.
This would be like this Apollo dude sitting outside the salon, and selling really nice slippers or lotion that the salon doesn't sell. It can enhance the experience you're having at the salon. The rub is, the salon might want to control the experience more end-to-end, and promise to make good slippers and lotion, and not want Mr Apollo outside the door hocking his wares and leveraging the traffic/platform to make his own revenue.
The CEO of Reddit essentially said that he doesn't feel that the third-party apps should be profitable if they're (Reddit) not profitable. But their cost basis and value proposition is very different. Apollo is useless without Reddit. Reddit is more pleasant to use with third-party tools like Apollo. They should have a symbiotic relationship, and instead, it's combative.
There was a happy medium here where Reddit could have gave a longer runway to changes, let me give Reddit my credit card for my third-party API usage, and let me feed my token into Apollo. As a user, I have no issue with paying for a nice app experience (Apollo) while also paying to use the platform itself (Reddit). Just wasn't an option afforded to us, they'd rather just bill Apollo for my usage instead of me, because it puts more of the onus on Apollo and not them.
Reddit wants to control the experience end-to-end. They don't want Apollo or other third-party tools to exist, because their existence indicates a shortfall in their in-house experience and they cede some amount of control as a result.