Despite understandable misgivings with ATProto due to its corporate origins and its architecture lending itself to centralization, it's still open source. Moreover, it serves a different purpose compared to ActivityPub, in that it specifically aims to enable and support larger scale social networks.
In a way, ATProto could be complementary to ActivityPub, but for this to be the case, there needs to be more shared understanding between both communities. People working on both recognize the faults in existing social media, and aim to address them in different ways.
ATProto provides an opportunity to break down big social media enclosures with data portability and a similar vibe to big social media, but with more individual empowerment to adjust what they see. The latter point is a commonality with ActivityPub, but ActivityPub provides a different angle of breaking the big social media enclosures.
Where ATProto serves the interests of those into big social media vibes, ActivityPub serves the interests of those into small social media vibes. In other words, ATProto scales up, where ActivityPub scales down.
ActivityPub is arguably a better protocol for both individual and "small" group empowerment, as it can enable otherwise less active, small platforms to connect and ensure there's always some level of activity to encourage people to come back. Think of old forums that, on their own, gradually faded out as people stopped visiting and posting for more active online communities. ActivityPub can serve as a buffer against that, to some degree.
Together, both protocols could provide a better, open social web, and perhaps effectively topple big social media enclosures. After all, who wouldn't like to see the web without Meta/Facebook and Twitter/X?
TL;DR: ATProto/ActivityPub have a common foe in big social media enclosures like Meta/Facebook and Twitter/X and would be better served working together to erode their influence.
Why cant Activpub scale up? The only issues so far are big instances can sometimes overload smaller instances.
Atproto has a personel data store allowing universal accounts but their is work to implement this into activpub.
So whats the advantage of atproto? Atproto has arguably hurt a federated future more than anything else.
Boobam, a japanese blogger did a report / comparison of Bluesky with Mastodon. One of his conclusion on Mastodon, is that it can't grow too much, by design. The more Mastodon traffic grows, the slower is gets and smaller instances will be overwhelmed. Now, there is no defined limit from when Mastodon will slow down so much it will be unnusuable. You can use your favorite translator to read the page: https://whtwnd.com/boobam.bsky.social/3l5uqcwjawe2e
It's not so much that ActivityPub can't scale up, so much as that for one, as I've understood it that's not really been desirable anyway (undermines the point of decentralization/distribution), and for two, it starts getting bogged down as you already recognize. It also runs into similar, if not worse, cost problems to operate as ATProto's full network approaches are now.
ActivityPub is more suited to scaling across multiple instances/sites than up, and I'd argue that's its strength. It unintentionally has an implosion threshold to counter centralization in terms of cost and performance.
On the other hand, ATProto's advantage is that it enables scaling up while also enabling better data portability. I'm aware of work on this with ActivityPub as well, but it's still very early stages. My thinking is that there may be some ways to work with both to push towards their similar shared aims in terms of an open social web, with more flexibility in moving between spaces and adjusting experiences to better find what one wants from these different spaces.
I think you need to be more careful with your use of "scaling up". You mean vertical scaling, while ActivityPub is good in horizontal scaling.
Indeed, with ActivityPub you will probably never have a single point that has a global view of the network, which (at least for now) is the way ATProto presents the network. Arguably that is not a desirable feature anyways, but lets just say that people have different opinions on that.
We use different terms, but that's what I'm referring to here: