Without having a raft of data in front of me, you'd have to assume that many Large Development Shops had an Instagram API token and are being impacted by this change in addition to independent developers. The irony is that Instagram themselves felt this burn from a 3rd party provider back in the day when Twitter yanked their API access[0]
Certainly, existing laws are ill suited to the current tech ecosystem.
Because Facebook and the like are free, they evade existing competition laws. But it's not unreasonable to ask, as a society, that these huge companies take on some special responsibilities. That might well include something about openness.
Because it is something that we as a society do not desire. The data in those silos is our data, not their data (unless you want to live by the letter of the law rather than use common sense). It saddens me that a large part of our culture is locked behind the doors of youtube, instagram, facebook and twitter.
Here is an analogy. If I buy a piece of paper and it contains an EULA that says that any works written on that paper become property of the manufacturer of the paper, then would that be legally binding? If so, then do we want to live in a world where paper manufacturers have control over our intellectual property?
Note that paper is a commodity product, but the same holds for online video services, and messaging services. The ones we are using today have no or little competitive edge over other services (other than network effect), they were just lucky enough that we chose to use them.
That's a completely non-related analogy. A better one is if you were to go to a university, become a student, use their facilities, and do research there, then the uni rightfully owns a percentage of any IP you come up with there. It's in their ToS when you signed up and that's what you have chosen to stick to. It's no different if you use FB or Instagram; you've agreed to their ToS that data you've pushed through their service is their's to do what they want with. If you're not happy with that, move along and use something else- perhaps print your photos onto your hypothetical paper and share them using that.
Trying to answer policy questions from a framework of individual rights is only one way of dealing with this question.
Alternatively we can ask: are we as a society better off if we allow companies to demand the rights to user generated content, or would we be better off if we forced them to open up access?
