I think we are talking past each other. I understand that the current implementation of the federated social media lacks a lot of things, so I am not disagreeing that currently people would benefit from joining a bigger instance.

But my argument though is that we can have federated social media does not tend to overcentralization. If the Fediverse gets popular - really popular, tens of millions of active users popular - then there will be too many independent actors who will be participating and the whole system will lend itself to many different hosting schemes:

1. business running their own servers, to keep their control over their own social media identity.
2. companies who will give access to users contingent on another service (e.g, the NYT giving a free account to every subscriber of their newspaper, Vodafone setting up their own Mastodon service, free access for every mobile customer)
3. public institutions
4. self-hosters, community groups
5. companies who will offer the service for "free" and will try to monetize the service through some other means (e.g, Facebook/Threads)

IOW, if things grow and it becomes a viable alternative to the status quo, it will end up as a core infrastructure component, like email. And yes, Gmail is by far the largest provider and the hold a lot of power, but even they can't simply decree to flip the tables in their favor.