In 2025, over half of Instagram's ads ran on Reels, reflecting a significant shift towards short-form video content. While this trend boosts engagement, it poses monetization challenges for Meta, as Reels generally generates less revenue than the main feed. Competition from TikTok and YouTube remains a concern as Reels gains traction.

A Stanford study reveals that a potential divestiture of Instagram from Meta would increase competition among advertisers but ultimately harm users by exposing them to more ads. The research suggests that while ad prices may decrease, the quality of user experience could diminish as Instagram would need to target users more aggressively to compete with Facebook. The findings pose challenges for the FTC's case against Meta, which argues that the company is a monopolist.

Meta is contesting claims by the FTC that it has monopolized the social media market by acquiring competitors like Instagram and WhatsApp. During the trial, Meta argues that competition remains strong, citing user behavior during outages of rival platforms like TikTok as evidence.