Killing him was probably extreme, but something had to be done. If Fredo was allowed to go into business for himself without consequence, what message does that send to the rest of the Corleone family?
...and to Michael's enemies. Michael always felt he had to communicate to foes that no one gets a pass from Michael Corleone. That was one of the reasons he had to get rid of Pentangeli and Roth, even though they seemed to be defeated.
