I reckon that is one of the reasons. Lemmy’s (and the entire ActivityPub/Fediverse ecosystem/graph) attracts people with a positive, progressive attitude.
Advertising is based on passive attitude and thrives on negative attitudes.
There was a lot of negative being accepted (and sometimes actively pushed) on some instances, but most other instances defederated from them.

The worse thing* is that now they will all be known as “Australian-style”.
We used to be known for our electoral system and a variation of the butterfly swimming stroke. Now we will be known for a lame-arse attempt to restrict people’s access to content “for the children”*
*this is not actually the worse thing about this legislation; it actually puts at-risk children at more risk.