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I do work on instagram and yes engagement has been down. But they just said in the article that they prioritize posts with people you DM, people you comment and people you have been tagged with (ie: your actual real life friends). So this would explain the drop in engagement. Also have to keep in mind the platform has already more than doubled in users since the algo changes, that means people follow more people and this also dilutes your importance in someone's feed if they now follow twice as many people.

I think this means they prioritize people within your close circle above brand that try to engage with thousand of followers.

See quote on this article: Instagram’s main goal is to help you see content from your “friends and family,” and with the algorithm they say that people now see 90% of posts from their friends and family, instead of 50% when it was the chronological feed. https://later.com/blog/instagram-algorithm-update/

That means that if you're not friend or family, you are being seen less.

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