This is also slightly off. It was primarily to eliminate third party apps from the existing landscape. Reddit want money from users in one of two ways:

1. Use their app and pay with your data via invasive tracking and advertising.
2. Pay for a third party app that pays them for API access.

The case around AI does exist, but it was smoke and mirrors for Reddit pulling the same nonsense that Twitter did once they realized they might get away with it, regardless of the short term damage it would do to their public image.