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Putting Tumblr on ActivityPub could be interesting and potentially save it, but there’s so much deleted content from when it was in its prime that I’m not sure if it’s even worth it. The platform is so dead.
That said, giving taxpayer money to private social media businesses is the worst idea ever. In the first place, public money should mean public code.
A government-sponsored instance could be interesting, but I’m not sure what value it would bring. Also it would probably turn instantly into worse than Facebook with toxicity.