It’s perhaps a communication problem, where the privacy settings should clearly state this. Or these settings shouldn’t be offered. But maybe this current structure is fine for most people?
Regardless, it’s how existing social media used to work. In that sense, federated social media can’t offer an alternative and that could be a problem for some.
In theory it is a horrible idea. No port like this ever works out. An incremental approach has much higher chance of success but will take long.