They've honestly done exactly what they'd said they would so far. They always said it would federate eventually, but not at first. They were even clear about it with their early adopters/influencers. They later clarified that it would be in 2024 and they've just started a small trial of limited federation a few weeks early.

Mike Masnick has covered it a lot. He's consistently reported that they are surprisingly determined to federate. I don't think there's a downside for them. They aren't connecting either of their cash cows and Threads isn't a huge moneymaker for them. It seems more an opportunity to head off the EU regulators (and poke Twitter in the eye).