Do you know why Facebook paid a billion dollars for Instagram? Instagram wasn't worth that much. It wasn't generating a billion dollars in revenue. It probably still doesn't.

Facebook bought Instagram because Instagram was a growing app that was popular with a demographic Facebook wanted to control. They spent a billion dollars to eliminate a growing threat.

Mastodon and, to a lesser extent, Lemmy, represent a growing threat. Not a very big one right now, but it could become a bigger one. It could become another billion dollar problem for the goliaths on the Internet, in a few years. They need to have total control, if a social media app starts to fragment it just collapses instead as users decide to go wherever the other users are.

Facebook's 1000:1 user ratio would make Lemmy irrelevant and stave off that billion dollar problem for Facebook down the road. An incredibly cheap way to kill a tiny but growing competitor.

They don't want to federate because Twitter does not.

But neither to "extinguish" Mastodon or so. They need it as a defense like Google uses Mozilla, showcasing that not only do they enjoy competition, they in fact actively support it, by making their content available over there, too.

Because like you say, the entirely metaverse is so tiny compared to meta, thy could not give a flying fuck whatever the reason if it's about anything competitive. But they can utilize the tiny underdog as a shield from criticism. And that's valuable to them.