Instagram angers users with new privacy policy

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  • Instagram CEO, Kevin Systrom reportedly accepted a $525 million buyout deal from Twitter just weeks before Facebook offered $1 billion. <B></B>

    Instagram CEO, Kevin Systrom reportedly accepted a $525 million buyout deal from Twitter just weeks before Facebook offered $1 billion.

Instagram, the popular photo-sharing service that Facebook bought this year, is the target of a storm of outrage on Twitter and other sites after a change in its user agreement hinted that it might use shared photos in ads.

It's not clear that anything substantive has changed in Instagram's new terms of service, which were posted Monday and go into effect January 16. As is the case before, the service reserves the right to use shared photos in any matter it likes, though the photographers keep "ownership" of the photos.

The updated terms of service say users agree that their photos could be used "in connection with paid or sponsored content." The current terms say the service can place ads "on, about or in conjunction with your Content."

The updated terms suggests that Facebook wants to integrate Instagram into its ad-serving system, which can, for instance, promote an item by telling users that their friends "Like" it. The new terms make it clearer that Instagram could use your photos to market to your friends.

Instagram announced the change in a blog post, but didn't explain its intentions. It said a concurrent change to the privacy policy, a separate document, would help Instagram function more easily as part of Facebook.

Twitter users were vowing to cancel their Instagram accounts in response to the policy change, complaining that the new terms would essentially let the service sell people's photos for ads.

Facebook’s offer to buy Instagram for $1 billion stunned Wall Street and the Silicon Valley when it was announced in April, but no one was apparently more surprised than the executives at Twitter.

That’s because just weeks before Instagram accepted the $1 billion buyout from Facebook, its CEO had reportedly agreed to an offer from Twitter.

According to a report by The New York Times’ DealBook Blog, Instagram CEO Kevin Systrom had verbally agreed to sell his company to Twitter for $525 million in March.

Instagram’s founders “held several meetings as late as March with top Twitter executives,” The New York Times’ Nick Bilton reports.

Twitter executives were then shocked to learn that Mr Systrom went ahead with the Facebook deal without giving them a chance to make a counteroffer.

Mr Systrom later told California state regulators under oath that his company had not received any "formal offers or term sheets" from potential buyers aside from Facebook. The Times report said that its sources said that during negotiations with Instagram, Twitter executives had given Mr Systrom a term sheet outlining the details of a proposed deal.

Facebook CEO Mark Zuckerberg ultimately acquired Instagram after pushing through a cash-and-stock deal just weeks before Facebook's May initial public offering. The transaction closed in September at a $715 million valuation, reflecting Facebook's stock drop since the offering.

Relations between Twitter, Instagram and Facebook have soured since Facebook successfully swooped in on the photo service. Earlier this month, Instagram shut off a functionality that allowed Twitter to display Instagram pictures, while Twitter has introduced its own photo colour-filters to compete with Instagram.

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Published Dec 19, 2012 at 8:00 am (Updated Dec 18, 2012 at 6:47 pm)

Instagram angers users with new privacy policy

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