It's not "proprietary", it's openly specified and is literally being taken to IETF: https://docs.bsky.app/blog/taking-at-to-ietf

Also, unlike ActivityPub, it's actually useful for building features that normal people expect from social apps — for example, algorithmic feeds and search, and a single interlinked world (rather than fragmented "servers").

Eh, AP has its own sets of problems (underspecified protocol, split-brained on discoverability, new developments are met with hostility in the community)

If they want to remain a niche echo-chamber platform rather than become a major social network, that would be an appropriate strategy. However, I expect they have higher ambitions.

What they should also do is redesign (or remove) the "nuclear block" feature. In its current state, it helps perpetuate a hostile and exclusionary atmosphere to new users, which isn't going to help Bluesky grow an active and diverse userbase.

You have more than one user base.

You have to make hard product decisions about which user bases to serve.