It's already not in the EXIF data anyways. Instagram API is assigning its own geo tag to it, so why bother with all the extra info that they don't need to track?
Granted, still a dick move– they could just store it, but I think you're imagining that they're going to strip EXIF data (which they already do anyways)
Is there a reasonable interpretation of this that would make it not a dick move? Like maybe they assume if you don't want to share your location now, you never did in the first place?