“Why is $[Social Media CEO] destroying their website?”
Because their internal reports suggest that their power-users (die hard, addicted, cost of time fallacy drained users) will not leave their platform even for the dumbest or worst changes.
The people who will leave? The ones who don't have reach, the ones who aren't advertiser friendly, the ones with literally nothing to lose on their sites. They are the ones who "waste" their bandwidth and resources, they post images, videos, and more at a much higher rate than the deigned social-fantasy gods hitting those 1000x multipliers of social engagement, and they won't receive any tangible money from them because they don't have a reach at that level.
$[Social Media CEO] is openly trying to drive the 'common' person off their platforms, the ones who bring little to the table that an AI bot can just replace to satiate and give the 'influencer/marketer/shil' their respective analytics. This is why platforms actively fail at solving "The Bot Problem" in most cases. Sure it's a relatively hard problem to solve on a systems level, but it's not impossible to severely reduce the bot population. Bots help daily active user counts, engagement, and pushing the power-users to continue using the platform as nudges (and often inflate those wonderful financial reports for their stock price to go ever higher).
Talking of stock prices, there is the concept of cost-per-user, or revenue-per-user. If you reduce the 'common' user, and focus on power-users you can change the more important analytics for the stock price for internal or external investors. Less people, but with more (or the same, or even less revenue) looks better. Think of it as "Less Effort but for the same money". A reduction of "staff", for the same monetary output.
Social Media platforms used to try hard for everyone to be on them. They don't want that anymore. Dealing with everyone is a nightmare. But those power users? The ones who generate revenue from a smaller set of users? That's the goal. This is the "private club" of yesteryear, for the internet.
This is the new internet business plan, different form than the one everyone thinks of that has dominated the last thirty years of the internet. This is the new way to do business on the internet in the 2020s.