Is this even that negative PR? They're probably going to get more people going "oooh Prince Harry and Meghan are on Instagram I should follow them" than being outraged and quitting
They is referring to the Prince and Meghan, correct? They have to know by now what happpened. They can give the name back. Or not use it at the very least. Otherwise why shouldn’t it fall on them? Not knowing beforehand isn’t an excuse to go along with it now.
It’s Instagram’s responsibility either way. They could have said “pick another name or we can nicely ask the current owner for that one.”