The RedReader app has been given accessibility status by the graciousness of reddit and will not have to shut down. The dev is not particularly happy about how fellow devs were treated though and still plans on adding lemmy in future. Read the announcement here
From what I understand, even paid use of the API prohibits 3rd party ads under the new terms. So that $20M/year they wanted to charge Apollo? Yeah it also meant /u/iamthatis couldn’t serve ads on top of that.
Yeah, it will become unsustainable for the 3rd party devs, that’s why many of those apps will shutdown, Reddit will got what they want in the end, no more 3rd party apps, or really gimped ones.