The issue with this is holding tech companies liable for every possible infraction

That concern was the basis for section 230 of the 1996 Communications Decency Act, which is in effect in the USA but is not the law in places like, say the EU. It made sense at the time, but today it is desperately out of date.

Today we understand that in absolving platforms like Meta of their duty of care to take reasonable steps to not cause harm to their customers, their profit motive would guide them to look the other way when their platform is used to disseminate disinformation about vaccines that gets people killed, that the money would have them protecting Nazis, that algorithms intended to promote engagement would become a tool not just to advertisers but to propagandists and information warfare people.

I'm not particularly persuaded that if in the US there is reform to section 230 of the Communications Decency act, that it would doom nonprofit social media like most of the fediverse- if you look around at all, most of it already follows a well-considered duty-of-care standard that provides its operators substantial legal protection from liability for what 3rd parties post to their platforms. Also if you consider even briefly, that is the standard in effect in much of Europe and social media still exists- it's just less-profitable and has fewer nazis.