He jokingly offered that the whole situation can easily be solved — he shuts down/sells his app for half of the “lost” money reddit would make were Apollo’s users using the official app. Win-win for both sides. The other side of the phone call misinterpreted a “quiet down” expression, which was used for the API calls from Apollo servers (serving which costs Reddit money).
It seems too ambiguous to judge, honestly.
It seems like he was trying to invoke a sort of ironic use of quiet down to ease the situation, but ironic extortion is still extortion.
(for the record, I almost feel like he's in the right to do so. Still weird how this is being presented)