I believe what we have here is the rare double-reverse-whoosh

You don’t need capitalism to motivate innovation, as long as you still have warfare.

They aren’t defederating everyone. They are selectively defederating the instances they don’t like. Or selectively federating the instances they do like. Which is exactly how the fediverse is meant to work.

If you like the instances they don’t like, or vice versa, then you should make your account on an instance other than theirs. Which is also how the fediverse is meant to work.

I’m not sure the problem is so trivial.

Long before the existence of IP, people who developed something new would keep their manufacturing process secret in order to prevent competition. Even today, sometimes they still do (in fact, the purpose of patents is to discourage trade secrets).

Now suppose someone invents a new medicine, or a new alloy, or a new machine, or a new algorithm, and refuses to tell anyone how it was made or how it works.

And suppose reverse engineering isn’t feasible. Maybe it’s too much work considering the value of the product (nobody is interested in reverse engineering your particular favorite shampoo). Or maybe the machine uses sufficiently strong encryption to prevent its reproduction. Or maybe there is some other obstacle.

Again, before modern capitalism these problems were the norm. If you wanted a very particular product, you often had no choice but to find a very particular provider.

As before, at what point does paying someone to help make such a product become exploitation?

Well, good news then. The vast majority of Mastodon and Lemmy users are on just a few big instances.

Those who are not, have their reasons. That’s ok, the big instances will still work as you expect. There is no reason to “centralize” people who intentionally want to remain on the periphery