I see no downsides to the idea of federation at all. All the downsides that exist on the specific platforms can be fixed or addressed; there is no inherent flaw in interconnectiveness of various sites/platforms/models, and that's all the "federation" is: various sites connected together sharing content.
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That they are still centralized in a way. Federation is only the first step, the next step must be real decentralization, so no more server software!
It might decide to construct a secret droid army and plot in the shadows to overthrow the galactic republic, all while secretly acting as a tool manipulated by the dark lord of the sith. Also tricky trying to explain to people that to join something called ‘lemmy’ they need to go to geddit.social or kbin.social or whatever but that it’s all basically the same except it’s not. Personally I think the Sith Lord thing is a bigger issue.