And while Snapchat's AR filters were (and still are) state-of-the-art, those are only short-term distractions and don't have long-term stickiness.
They'll have a much harder time with TikTok. Tiktok's secret juice isn't the Slightly-Longer-Vines. It's the recommendation algorithm. It's INCREDIBLY addictive.
It's also (today) wildly incompatible with Instagram's bread and butter, which is celebrity influencers peddling masked branded content.
Tiktok's very brilliance is that it's egalitarian - every video gets 100 views. And if you're a heavy user (say 1 hour a day) you will almost every day discover some amazing new creator or video BEFORE they go viral. (or as viral as they might in this app where you get 15 seconds of fame not 15 minutes)
I predict that Instagram will fail to beat Tiktok here, but TikTok will be trying hard to be one of the big boys, and ruin what makes it amazing by attracting and embracing celebrities and brands (already starting to happen).
If Instagram can hold on to their celebrities long enough (and i think they will), they'll win out in the end when people get bored of TikTok after they self-sabotage their recommendation algorithm.