Lessons from Facebook’s Instagram Photo Flap

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Philippe Wojazer / REUTERS

Kevin Systrom, Chief Executive of Instagram, the popular photo-sharing app now owned by Facebook, displays his photo on a mobile phone during an interview with Reuters December 4, 2012 at the LeWeb technology conference in Aubervilliers, near Paris.

If you don’t follow tech news, you may have missed a bit of a kerfuffle this week involving Instagram, the popular photo service purchased by Facebook for $1 billion in April. Earlier in the week, Instagram announced plans to share your photos with advertisers, in some cases without notice or compensation.

Instagram’s goal was clear: the service has tens of millions of users, but like its parent company Facebook (which has 1 billion users), Instagram is looking for ways to make money off of its users’ content, in this case photos. Keep in mind that at the time Facebook bought Instagram, it was generating zero revenue.

Here’s the language in Instragram’s proposed policy that set off alarm bells:

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.

Legal experts and privacy advocates expressed alarm at Instagram’s proposed policy. “This is all uncharted territory,” Jay Edelson, a partner at the Chicago law firm Edelson McGuire, told Reuters. “If Instagram is to encourage as many lawsuits as possible and as much backlash as possible then they succeeded.” Even Facebook CEO Mark Zuckerberg‘s wedding photographer was angry about Instagram’s plans.

Instagram’s users rebelled with a ferver that was dramatic even by the standards of the Internet, where barely a day goes by without an outraged backlash to some injustice, real or imagined. (Some users were even under the impression that Instragram planned to sell your photos to third parties, which turned out not to be the case.) In short order, Instagram backed off, apologized, and said it would change its proposed policies to address the criticism. “To be clear: it is not our intention to sell your photos,” Instagram founder Kevin Systrom wrote. “We are working on updated language in the terms to make sure this is clear.”

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The whole episode may seem like just another Internet quasi-scandal, but in fact, these privacy flare-ups have turned into a pattern for Facebook. In Facebook CEO Mark Zuckerberg’s self-styled hacker mentality, new products and policies are pushed out before they are fully-baked. As we’ve seen before, the company tends to push the envelope on privacy, get busted, retreat, and withstand the backlash to live another day.

“I think Facebook is probably using Instagram to see how far it can press this advertising model,” Marc Rotenberg, the executive director of the Electronic Privacy Information Center, told Reuters. “If they can keep a lot of users, then all those users have agreed to have their images as part of advertising.”

To Instagram’s credit, it responded quickly, but in truth, the notion that these social networks are seeking to profit off your content really shouldn’t shock people. It’s how these companies make money. On free social networks, you, your data, and, yes, your photos, are the product. People think that they are the customer on platforms like Facebook, but in fact, the advertiser is the customer, and you and your data is the product.

From a business perspective, the whole point of these free social networks is to accumulate as much information about you as possible — the better to sell you to advertisers. Every time you upload a bit of information to Facebook — whether its your name, location, school, interests, and yes, photos — you are putting your data in someone else’s hands. So users really shouldn’t be shocked that the company’s intends to make money off that data.

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What spooked people about the latest episode is that the content in question is photos, which generated a visceral reaction from people, not only because photos tend to be more intimately personal than, say, what your favorite movies are, but also becaue there are so many of them. Over one billion photos have been uploaded to Instagram, creating a vast collection of content that the company, understandably, would like to derive value from.

In reality, the backlash was a bit overwrought, as several writers pointed out. “Do people even know how the Internet works?” asked Kevin Roose at New York magazine. “The entire point of starting a social-media company is that it gives you the ability to make money by advertising things to people.” Added Jeff Bercovici at Forbes: “Doesn’t this happen just about every time a free internet service starts making noises about paying the bills?” Nilay Patel at The Verge had perhaps the best insight. “The real lesson here,” he wrote, “isn’t about the legal implications of Instagram’s terms of service — it’s about how little we trust Facebook to do the right thing.”

This episode should be a reminder to people about Internet privacy, and a cautionary warning that everything you post on Facebook, Instagram, and, for that matter, Google, should be considered public. Specifically, do not ever post anything you do not want “monetized” by a third-party. Although social networks like Facebook explicitly say that users in most cases do retain ownership right to their content, the terms of service stipulate that most content can be used by third parties for commercial purposes. You may technically own this content, but these companies’ whole business model consists of extracting value from it.

After all, as Instagram founder Kevin Systrom pointed out in his mea culpa blog post: “From the start, Instagram was created to become a business.”