How Did Instagram's Privacy Policy Goof Affect The Site's Reputation?

Just 24 hours after unveiling a new invasive privacy policy, Instagram took it all back. What’s unclear is why the Facebook subsidiary risked the ire of its 100 million loyal users in the first place. Talk about killing the golden goose. There’s been lots of speculation about how Facebook will monetize the recently acquired photo-sharing platform, but no one anticipated the no-holds-barred, full-frontal breach of user privacy outlined in the revised terms of use agreement:

“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.”

Legalese aside, it meant Instagram could sell your photos to third parties for commercial use without telling you. That’s right – those cute #instapuppy pix and the what-I-had-for-dinner food porn were almost up for grabs, destined for a bus wrap in Jakarta.

Google immediately sought to capitalize on Instagram’s faux pas, with a spokesperson championing users’ intellectual property rights to CNET, “What belongs to you stays yours. … In addition, on Google+ you can export your photos and other data whenever you’d like.”

You’d think Facebook would have learned from Yahoo’s infamous photo-rights fiasco in 2007, when its so-called “brand portal” for the Nintendo Wii used Flickr images without permission. Yahoo blinked. Instagram did too. It remains to be seen how many Instagrammers deleted their accounts before CEO Kevin Systrom broke his silence and begged for forgiveness. “I’m writing this today to let you know we’re listening and to commit to you that we will be doing more to answer your questions, fix any mistakes, and eliminate the confusion,” said Systrom, in a blog post. He went on to say Instagram has no intention of selling user photos and that the offending language will be removed from the policy.

Was this a strategic attempt to float a self-serving privacy policy change and see if anyone noticed? Or was it the opposite – a complete lack of strategy reflecting a troubling disconnect between Instagram’s leadership and its users? You can read more about this on CNET’s article entitled Instagram Says It Now Has The Right To Sell Your Photos, and then of course the follow up article Instagram Apologizes To Users: We Won’t Sell Your Photos.