I don't think that's it at all. Advertisers can target subreddits / content on reddit.

Where the advertisers target their ads is irrelevant because they still have to pay Reddit for the placement. If Reddit hosts some kind of controversial content, people can argue that the advertiser is giving financial support to Reddit and is therefore endorsing the content, even if it's not on a sub they advertise on.

All social media has controversial content. In the advertising world "user generated content" is close to the bottom of the barrel anyway... yet, it's the main revenue driver for companies like Facebook.

People pearl clutching over user generated content is just an observational reality.

The “ad-pocalypse” on YouTube and it’s subsequent iterations saw tons of youtubers demonetized and “problematic content” throttled all because discussions of the “alt right pipeline” of YouTube. People started calling sponsors like Coke telling that that they must support this content if they advertise on YouTube etc, so YouTube crushed it. Likewise on all other social media. It’s another outgrowth of outrage/cancel culture

Not saying it's right, but that's how it can work.