The people who run social media sites knew all the stuff in your 2nd paragraph would happen from about 2010 onward.
I... remember reading blogs of people working for them, explaining how a human brain can't really handle knowing or having more than roughly 50 to 100 friends, after some threshold is passed, your brain switches into another mode of social thinking.
... And they knew that, and so much more, and exploited the fuck out of literally everyone, first to sell ads, then they realized data was the new oil.
Yeah, basically, social media was a mistake.
Algos will always naturally 'conclude' that the best way to drive engagement is to promote things that make people paranoid and angry, and speak to their insecurities, and make them worse.
Now we can literally buy an AI neck pendant friend for $99, for people who are so pathetic and so in need of validation they will just literally buy a simulacra of a friend, because socialization itself has been destroyed.
We are living through a kind of cyberpunk dystopia somehow more insidious and fundamentally debasing of what it even means to be human than any author I've read predicted or warned against.
My response so far has been 'the only winning move is not to play', I will never tie my real identity directly to any web presence ever again, nuked all my shit, everywhere, when Cambridge Analytica broke.
They have been social engineering with supercomputers for a decade now, and it is more or less making them so much money they literally do not know what to do with it, as it hollows out everyone and everything, acts as gasoline on their accelerationist fire.
... call this a parasocial relationship if you want, but I miss David Bowie.