Users forget passwords. Sometimes frequently. If data is lost every time a user forgets their password, that could cause them more immediate harm than good.
With that said, I'm in full agreement. End-to-end encryption of user data seems like it would solve plenty of problems on their end (with the exception of monetization).
What you are calling a 'galaxy' is actually just our solar system, one of millions in the Milky Way Galaxy. The stars you see are located in our galaxy.
There's diaspora [0] and GNU social [1], but those haven't yet managed to pop up into the mainstream. Network effects should ensure that they do not anytime soon. With that said, the mounting controversy over Facebook and Twitter's moderation may end up pushing marginalized groups into these platforms.
With that said, I'm in full agreement. End-to-end encryption of user data seems like it would solve plenty of problems on their end (with the exception of monetization).