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Important lessons from the Instagram controversy

iMedia Editors
Important lessons from the Instagram controversy iMedia Editors

In December 2012, Instagram released an updated terms of service agreement that created immediate outrage. The crux of the controversy focused on the language that stated:

Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.

Users saw this change as Instagram's attempt to convert users' personal pictures for the company's own use and profit. After millions of members unsubscribed from the service, Instagram relented and abandoned the controversial change. While the proposed language was never implemented, the December 2012 incident offers insight into the current state of internet privacy.

Instagram's privacy policy before the controversy, and the one that was implemented afterwards, contained a provision that allowed Instagram to share user information in order to provide targeted advertising. Despite the continued debate over the merits of targeted and behavioral advertising and poll data that suggest users disfavor targeted ads, it appears that behavioral advertising has become a norm for the social media industry. To this point, it is noteworthy that users withdrew from Instagram, or threatened to withdraw from Instagram, over Instagram's purported attempt to convert users' property into its own source of revenue. However, the continued practice of targeted advertising did not stir any similar controversy or outrage.

Thus, it appears that a norm has developed within the social media community. Users have become willing to accept a small invasion of their privacy (targeted advertising) in return for the free access to social media and other content. For the companies themselves, the norm has become a double-edged sword. On one hand, social media companies can leverage their user base to third party advertisers for profit. On the other hand, users may be reluctant to accept changes that extend beyond the privacy norm that has already been established. For companies, like Instagram (owned by Facebook), which have shareholders who crave constant revenue and profit growth, the failure to extend the privacy norm may prove problematic.

The implications created by Instagram's proposed privacy change have been hotly debated. Nevertheless, however the language was intended to be interpreted, the proposed change became a public relations failure. The overwhelmingly negative response indicates that users are unwilling to relinquish property rights in their data, especially when the property is personal photographs. With the revised policy in place, the benefit provided by the website no longer provided sufficient value to warrant many of Instagram's users to continue to use the company's product. Ultimately, Instagram and all social media companies are beholden to the preferences of their users because access to users is these companies' stock in trade.

Instagram's 2012 revised policy change could be described as a failure of imagination. Since the company did not adequately assess the preferences of its user base in regard to the proposed language, Instagram misjudged the intense user reaction that followed. Instagram needed to better understand its users prior to posting the controversial language and determine which changes could be accepted by its users and which could not. This could have been accomplished through questioning users in focus groups or with polls. Allowing users to have a voice in the privacy conversation may prove to be a worthy investment as ideas never previously considered could be discovered. For example, maybe a focus group or poll would have revealed that Instragram's proposed change would have been acceptable to users either if Instagram offered to pay a portion of the money generated from the users' property to the users themselves as a fee or if the users were able to opt-out from the controversial portion of the policy. 

The social media industry should take away a few important lessons from this Instagram case study. First, users are reluctant to freely abdicate rights that have traditionally received copyright or trademark protection. Second, companies should take every precaution to clearly explain changes to its privacy policy. Language that is likely to draw controversy should be written in plain English and subject to singular interpretation. Foursquare's January 2013 privacy policy change provides a good example. In that policy, Foursquare provided a question and answer section that was forthcoming with how users' data would be utilized. While the changes were significant, the way the company addressed the changes aided in its successful implementation.

Finally, social media companies would be well served by polling their users prior to making any major privacy changes. In the past, Instagram's parent, Facebook, has used polls to gauge the privacy preferences of its users. Although Facebook has found that very few people participate in privacy polls, the information gathered from polling is still useful. Users who respond to polls are typically more concerned about their privacy rights than non-responders. By knowing the privacy preferences and tolerances of the privacy minded users, a company is in a better position to predict whether a privacy change could be successfully implemented. 

Social media companies will continue to have to play a delicate game: maintain and build their user base while experimenting with new ways to develop revenue and grow profits. At the least, Instagram's 2012 privacy incident was an important learning experience for a growing and evolving industry.

Andrew Bolson, Esq., is an associate with Rubenstein, Meyerson, Fox, Mancinelli & Conte, P.A.

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"Privacy button" image via Shutterstock.


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