Nope....dehydrates them and only if they have a exoskeleton. While TRUE you need to keep the birds out of your using it AND you yourself (birds too) should NOT inhale it. Hence use a small amount (no layer of it laying around). It does not suffocate invertebrates.
There are fans of DE and some...
I use Food Grade DE. I don’t know how much you put in your coop. I use a empty soap bottle (like dawn) and puff a mist or cloud in the coop (no chickens inside). I sprinkled on the floor under the fresh bedding. I have to be careful not to inhale it.
I also mix it once a month into their feed as...