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Social media is just a symptom of the larger problem which is the corporations prefering to build walled gardens so they can control users rather than the open protocols that defined the early internet. Back in the day, I used to call it "everything becoming facebook".
Social media is fundamentally a moat - a wall built around a set of consumers to keep them away from competitors. Investors love moats. If you whisper as quietly as you possibly can to yourself "I found a company with a wide moat that no one is talking about yet" JP Morgan himself will literally burst through your wall like the Kool Aid Man. They love it because it avoids competition, and as much as competition is the whole point of capitalism, it's the last thing an actual capitalist wants to deal with.
A big part of what made the early internet super valuable was the opposite of moats: open protocols. For example how GMail can send email to Yahoo or any other email provider. If Google had their way, that's not how email would work at all - you'd need a google account to both send and receive emails. That's why these companies have been trying to kill email for ages, trying to get people to use their own proprietary messaging systems instead, where you can only send to others with an account. Then they could capture you and keep you all to themselves.
Which brings us to the fediverse. The fediverse is an attempt to return to open protocols rather than creating a moat around a group of users. In many ways it's like email - your email provider might cut off a server if it's just sending spam all day, and this is basically defederation. But otherwise nothing stops you from communicating with anyone, and that's how it should be.