Definitely. At least the damage could be largely limited to just that instance though. I can’t seriously imagine the people behind it letting their ideals trump profit for an extended period of time, especially with financial imperatives from the costs associated with the infrastructure required if that one instance alone had so much traffic.
Theoretically though, if it started going rancid it’d be much easier to jump ship without losing out on too much, that is unless they defederate with everyone or everyone defederates with them, either of which could be distinct possibilities. In that case, I guess you’d just have another Reddit.