This is 100% a play for increasing the types of ads for Instagram, but I think it will hurt the platform in the long run.
When I started using snapchat, I thought one of the coolest features was that I could see everyone who viewed my story. Suddenly, I knew my audience and everyone who viewed my snaps. It made me want to post more on snapchat because I knew I had an audience.
I've heard from multiple Instagram users that their recent photos have not gotten the same amount of likes or views as they used to before the algorithm change, and I think this will cause users to be discouraged from posting to Instagram. It almost gives the platform an illusion that it is on the decline, regardless of if it is true or not.