Discord, Instagram, Snapchat, Clubhouse and TikTok have decided to ban third-party apps. Twitter and Reddit decided to charge for it.
In this case with the developer of the third party Reddit client, unless he is making enough to cover the API costs, then it make no sense to build on someone else's API with little to no revenue. That is the risk.
It is no different to TapBots (creators of TweetBot) doing the same mistake.
It would be a better question to ask "Why did Mark Zuckerberg buy successful VR game companies and shut their games down?" (if you were having fun you wouldn't visit Horizon Worlds) or "Why did Zuckerberg damage a successful brand by renaming it?"
It's not about money, it's about power. The primary currency of power is deference and if one powerful person demonstrates they can take an action and get deference that action is appealing to other powerful people who want to prove they can to do the same.
Twitter and Reddit both allowed a thriving third party ecosystem to develop before they made apps. (And in both cases they just bought the most popular apps.) Hell, the word tweet was invented by Twitterific, a third party twitter app.
While it certainly is completely up to the platform to allow whatever they want, it's shitty to make a change that big and alienate many of your original most dedicated users.