mat1024
Instagram is probably not snooping on your audio - that's why, with the microphone turned off, you're still seeing related ads.
IG has a profile on everyone who is connected to your WiFi. IG will show you ads based on yours and other wifi users' demographics - if your buddy is connected to your WiFi, and perhaps you're both male and roughly the same age, perhaps you follow some of the same content creators, then IG will assume the same ads which apply to your friend could also apply to you. No "microphone snooping" necessary.