Both companies are completely data driven with some amazing engineers; but why is the Reels product boring, while TikTok is engaging has to be something other than TikTok pulled the "wholesome" lever. (There was a ~month where I was getting incredibly depressing sideshows, so I don't think tiktok is 100% wholesome).
My theory has been that people have been conditioned out of posting to Instagram (if you don't have a literally perfect life, then why post) and as a result Instagram just has less content to draw upon. I think this effort to chase TikTok isn't going to pan out because "regular" people aren't posting to Instagram.