> The ATProto was designed around all data being public.
I might turn this around to say that ATProto was the square peg trying to fit into the round hole (the vast majority of people want privacy)
The main need is strong authentication, certainly for enabling P2P microblogging type apps.
The privacy stuff is covered by Signal etc. anyway, and you could layer that on top if you wanted to, but in a P2P setup privacy is always going to be a bit disappointing as so much metadata is inevitably exposed unless you do crazy stuff like flood fill the network with every message without regard to routing.
the first version of bluesky was an internal effort to make twitter decentralized. atproto comes from twitter/ig type social media where almost all content is public so not supporting private data for v1 was an obvious choice.
they only decided to expand into other domains after the elon takeover made people move away from twitter and bluesky got popular way faster than expected.