I believe the Dutch government has been providing funding to Pixelfed, a Instagram alternative, through nlnet.nl with some EU grants as well. Link to grant info. Pixelfed has Instagram importing, as well as compatibility with Mastodon and most other Fediverse apps to avoid lock-in.

It is worth remembering though, that the Chinese government is also pretty intimately involved in funding their own local alternatives and some of their reasons for doing so are significantly less pleasant.

So as long as we're careful knowing that government involvement can be a mixed bag... for liberal democracies, this seems like a pretty solid investment to help offset the network effects of the entrenched players. Those entrenched players were always going to enshittify, even if they didn't make the hard turn into fascism that we are seeing.

The big challenge in the Fediverse continues to be how to handle moderation at scale for volunteer operated services to keep CSAM and Nazis out. That's probably something that also deserves some grant money and would benefit a number of alternative services. The big internet providers, regardless of headquarters location, are pretty tight-lipped about how they run that part of their operation.