Instagram, the popular photo-sharing service owned by Facebook Inc, said on Tuesday it has "no plans" to incorporate user photos into ads in response to a growing public outcry over new privacy policies unveiled this week.
Instagram Chief Executive Kevin Systrom said in a blog post that users had incorrectly interpreted Instagram's revised terms of service, released on Monday, to mean that user photos would be sold to others without compensation.
"This is not true and it is our mistake that this language is confusing," Systrom said. "To be clear: it is not our intention to sell your photos. We are working on updated language in the terms to make sure this is clear."
But Systrom said Instagram may display users' profile pictures and information about who they follow as part of an ad - a social marketing technique similar to what Facebook uses in its "sponsored stories" ad product.
He added that Instagram will not incorporate users' uploaded photos as ads because the service wants "to avoid things like advertising banners."
Instagram, which is free to use, triggered an uproar this week when it revised its terms of service in order to begin carrying advertising.
Facebook bought the fast-growing photo service - now with 100 million users - earlier this year in a cash-and-stock deal valued initially at $1 billion. The transaction closed in September at $715 million, reflecting a decline in the value of Facebook shares.
User privacy under threat?
Instagram, which spurred suspicions this week that it would sell user photos after revising its terms of service, has sparked renewed debate about how much control over personal data users must give up to live and participate in a world steeped in social media.
In forcefully establishing a new set of usage terms, Instagram, the massively popular photo-sharing service owned by Facebook Inc, has claimed some rights that have been practically unheard of among its prominent social media peers, legal experts and consumer advocates say.
All told, the revised terms reflect a new, draconian grip over user rights, experts say.
"This is all uncharted territory," said Jay Edelson, a partner at the Chicago law firm Edelson McGuire. "If Instagram is to encourage as many lawsuits as possible and as much backlash as possible then they succeeded."
Instagram's new policies, which go into effect January 16, lay the groundwork for the company to begin generating advertising revenue by giving marketers the right to display profile pictures and other personal information such as who users follow in advertisements.
The new terms, which allow an advertiser to pay Instagram "to display your username, likeness, photos (along with any associated metadata)" without compensation, triggered an outburst of complaints on the Web on Tuesday from users upset that Instagram would make money from their uploaded content.
The uproar prompted a lengthy blog post from the company to "clarify" the changes, with CEO Kevin Systrom saying the company had no current plans to incorporate photos taken by users into ads.
Instagram declined comment beyond its blog post, which failed to appease critics including National Geographic, which suspended new posts to Instagram. "We are very concerned with the direction of the proposed new terms of service and if they remain as presented we may close our account," said National Geographic, an early Instagram adopter.
Consumer advocates said Facebook was using Instagram's aggressive new terms to push the boundaries of how social media sites can make money while its own hands were tied by recent agreements with regulators and class action plaintiffs.
Under the terms of a 2011 settlement with the Federal Trade Commission, Facebook is required to get user consent before personal information is shared beyond their privacy settings. A preliminary class action lawsuit settlement with Facebook allows users to opt-out of being included in the "sponsored stories" ads that use their personal information.
Under Instagram's new terms, users who want to opt-out must simply quit using the service.
"Instagram has given people a pretty stark choice: Take it or leave, and if you leave it you've got to leave the service," said Kurt Opsahl, a senior staff attorney with the Electronic Frontier Foundation, a Internet user right's group.
What's more, he said, if a user initially agrees to the new terms but then has a change of mind, their information could still be used for commercial purposes.
In a post on its official blog on Tuesday, Instagram did not address another controversial provision that states that if a child under the age of 18 uses the service, then it is implied that his or her parent has tacitly agreed to Instagram's terms.
"The notion is that minors can't be bound to a contract. And that also means they can't be bound to a provision that says they agree to waive the rights," said the EFF's Opsahl.
Blocking Class Action Suits
While Facebook continues to be bogged in its own class action suit, Instagram took preventive steps to avoid a similar legal morass.
Its new terms of service require users with a legal complaint to enter arbitration, rather than take the company to court. It prohibits users from joining a class action lawsuit unless they mail a written "opt-out" statement to Facebook's headquarters in Menlo Park within 30 days of joining Instagram.
That provision is not included in terms of service for other leading social media companies like Twitter, Google, YouTube or even Facebook itself, and it immunizes Instagram from many forms of legal liability, said Michael Rustad, a professor at Suffolk University Law School.
Rustad, who has studied the terms of services for 157 social media services, said just 10 contained provisions prohibiting class action lawsuits.
The clause effectively cripples users who want to legally challenge the company because lawyers will not likely represent an individual plaintiff, Rustad argued.
"No lawyers will take these cases," Rustad said. "In consumer arbitration cases, everything is stacked against the consumer. It's a pretense, it's a legal fiction, that there are remedies."
Instagram, which has 100 million users, allows consumers to tweak the photos they take on their smartphones and share the images with friends. Facebook acquired Instagram in September for $715 million.
Instagram's take-it-or-leave-it policy pushes the envelope for how social networking companies treat user privacy issues, said Marc Rotenberg, the executive director of the Electronic Privacy Information Center.
"I think Facebook is probably using Instagram to see how far it can press this advertising model," said Rotenberg. "If they can keep a lot of users, then all those users have agreed to have their images as part of advertising."