If they go completely free speech then nobody will be able to read anything over all the spam, and the servers will be confiscated for possession of child porn in a few days.

I think it's safe to assume that they mean free "legal" speech.

I'm not sure, a lot of people seem to want speech free beyond even American norms. And "legal where?" is an important question.

Which is why federated solutions like GNUSocial, NNTP or email win here as moderation can be applied per-node.

Facebook could do the same thing if they wanted. Have the default be heavily censored, have option to disable aspects of it as the user desires. I presume they don't because they don't consider it a catch 22. Having people cry censorship doesn't matter to them, whereas they think hordes would leave or be forced off by governments if they didn't moderate sufficiently.

There's lots of ways for them to win. For the most part people just complain, it's a couple cycles of bad PR and then a very large segment of the internet goes back to enjoying the walled garden.

They're already doing moderation, though: Rohingya media gets blocked, white-supremacy media is allowed.

It has gotten to the point where an American anarchist writing that they want to travel to Yemen to fight imperialism is considered a terrorist and censored, but a white supremacist person saying we should "shoot all those monkeys in St. Lewis" is considered sacred free speech.

Yep. People complain about the "adpocalypse" and censorship from YouTube and Facebook, but they're really stuck between a rock and a hard place.

That said, I think they should always err on the side of free speech wherever possible.

We already have the complaints about censorship. What we don't have is sensible moderation.