In fact this is one of the downsides of the US legal system - litigation is so expensive that nobody dares trying it even though it could set a legal precedent that would benefit society at large. This is IMO something a consumer-friendly regulatory environment (such as the EU) should settle in advance like with the GDPR for example, but given they're not even bothered to enforce that effectively, I don't have much hope (if they enforced it, it would actually remove a big use-case for scraping Instagram, as you would be able to use the official clients without compromising your privacy).
https://news.bloomberglaw.com/us-law-week/supreme-court-scra...
The only way is for Instagram to restrict registration altogether, but you might create a black market where existing users sell their accounts, and cannabilize its own userbase (Bad for meta stock prices).
If there's demand for their service I don't see why it wouldn't scale. Get more phones, more SIM cards, and have automation around all this infrastructure to automate away as much of the stuff as possible.
> Meta/Instagram have multiple teams dedicated to preventing this type of scraping
That's great but ultimately they still have a weakness: they want people to be able to see their stuff - at least some of it - without logging in. As long as you can either simulate a normal device perfectly, or even better, use real devices or virtualize them, there isn't much that Facebook can do without impacting legitimate usage which they don't want.