>The answer my be that it still isnt easy to build reliable / scalable apps that people actually want to use. But sometimes I wonder if theres not something more sinister going on...

Why would there be anything more sinister? It obviously takes a ton of work and money to operate a service like Instagram. And if 99.9% of people are happy using Instagram in exchange for being tracked and/or giving another entity the power banish them from the network, then the community funded app is going to have problems competing.