Instagram’s Terms of Service Revision: Why It Strained the Bounds of Fair Contracting

Posted in: Consumer Law

In mid-December, Instagram, the popular photo-sharing site (now owned by Facebook) updated its terms of service (ToS).  Within a day of its doing so, it faced a large public outcry—mainly because of a term that would allow Instagram to share a user’s photos with Facebook and marketing affiliates for the purpose of creating paid advertisements—with the revenues going to Instagram, and not the photo owner.  The backlash was quick.  Users were concerned that a photo meant to be shared with friends would now be used in an ad, and possibly viewed by strangers? And even if the photo happened contained an image of someone who never uses Instagram, the ad might seem to imply that the person depicted was a user.

Afar the huge public ouctcry—with many users, including public figures, threatening to leave the site, Instagram backtracked and announced that it would delete the apparently controversial term, and would not be selling member photos to the highest bidder.

In this column, I will discuss Instagram’ s proposed contractual changes—and explain why they push the bounds of fair contracting with consumers.  I will also argue that even given Instagram’ s retreat on the advertising issue, the updated ToS should still give consumers legal heartburn.

Instagram’s Proposed Changes and the Controversial Advertising Clause

Instagram bills itself as an online photo-sharing service, reinvented as a “fast, beautiful and fun way to share your photos with friends and family.”  The site also tells consumers that it is free.  But Instagram needs to monetize consumer usage of the service somehow, which may be what prompted its recent attempts to change its ToS.

In mid-December, Instagram unveiled the new ToS, which are meant to take effect on January 16, 2013.  The proposed changes included a new clause that seemed to allow Instagram to freely sell user photos to other advertisers.   And this was presented to users in a take-it-or-leave-it manner. Users who declined to accept Instagram’ s new privacy policy would have one month to delete their accounts, or face having themselves (and their photos) bound by the new ToS.

Instagram’ s revised ToS appeared to set the stage for the company to earn advertising revenue by giving marketing firms the ability to display users’ profile pictures and other personal data such as which users follow in advertisements.

A section of the new ToS, entitled “Rights,” noted that Instagram will also be able to use user photographs and data in advertisements.  The new ToS states: “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.” This means that photos posted or uploaded to Instagram might end up in an advertisement on Instagram or perhaps Facebook.

In addition, someone who doesn’t use Instagram could end up in an advertisement as well    if they have their photograph snapped and shared on the service by a friend.   This really extends the bounds of contracting.  If an Instagram user posts a photo of his or her friend—she is in effect consenting on their behalf to having her image possibly slapped all over the Internet, in contexts to which she did not agree.

This consequence may seem trivial to some, but it raises an important issue: whether there should be limits to a contract.  It’s one thing to be able to republish a photo of an Instagram member himself—but what about third parties who may have no idea that Instagram would do such a thing? One can imagine that one’s neighbors and coworkers would get angry if they found that their images had been appropriated by Instagram just because those images were casually posted on an Instagram site after, say, a birthday party or retirement celebration.  The intent of the user in posting such a photo online and sharing it with friends is very different from Instagram’s intent of using it for an ad.

Instagram’s seemingly broad ToS provision—allowing the company unfettered use of user photos –quickly made consumers mad, triggering an outburst of complaints on the Web   from users who were upset that Instagram would profit from their uploaded content, without sharing that profit with them.

Professional photographers, for example were outraged that Instagram would try to use and profit from their photos.  Mark Zuckerburg’s wedding photographer, for example, was concerned about the fact that Instagram would use and repurpose his photos without asking for his permission. And National Geographic, another user of Instagram, noted, “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.”

Marc Rotenberg, executive director of the Electronic Privacy Information Center (EPIC), a leading privacy nonprofit, noted that the use of a person’s likeness in ads could run afoul of some state laws protecting people’s privacy.

Instagram’s Response: Retreat From Its Position in the Face of Lost Users

Public uproar prompted a lengthy blog post from Instagram to clarify the changes.  Despite w appeared to be unequivocal language; CEO Kevin Systrom stated that the company had no current plans to incorporate photos taken by users into ads.

Systrom does admit, however,Instagram was created to become a business. Advertising is one of many ways that Instagram can become a self-sustaining business, but not the only one.”

“Our intention in updating the terms,” Systrom continued, “was to communicate that we’d like to experiment with innovative advertising that feels appropriate on Instagram…” But Systrom went on, saying that “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.”

Systrom added, “The language we proposed also raised question about whether your photos can be part of an advertisement. We do not have plans for anything like this and because of that we’re going to remove the language that raised the question.”

Instagram did admit, however, that it would start using customer information in new ways that are linked to advertising revenue, explaining as follows: “To provide context, we envision a future where both users and brands alike may promote their photos & accounts to increase engagement and to build a more meaningful following. Let’s say a business wanted to promote their account to gain more followers and Instagram was able to feature them in some way. In order to help make a more relevant and useful promotion, it would be helpful to see which of the people you follow also follow this business. In this way, some of the data you produce—like the actions you take (e.g., following the account) and your profile photo—might show up if you are following this business.”

Despite the Changes to Instragram’s Past ToS, Its Current ToS Should Still Give Consumers Heartburn

Meanwhile, although Instagram has backtracked on the advertising clause, it still has revised its other ToS in a way that pushes the boundaries of existing privacy and contract law as well as consumer expectations. And the larger issue here is that it made a sweeping change to its terms with little fanfare or consumer education.  Rather, it simply included a statement that effectively said, “If you don’t like it, leave.”

What else might give consumers concern about Instagram’s plans?  First, it will begin sharing images and data with Facebook. Thus Facebook now will have a new market of folks to target and more data by which to serve up ads based on our travel, friends, preferences, etc.

More troubling, however, is Instagram’s apparent attempt to get around the issue of whether teenagers can legally consent to a contract with Instagram.  Typically, minors (that is, those who are under the age of 18) cannot legally enter into contracts—or if they do enter into them, they can opt to void them.  Hence, Instagram may not have the right to share photos of the 13- to 18-year-old crowd absent consent from the teen’s parents (This is a different issue from the issues raised by the Children’s Online Privacy Protection Act (COPPA), which requires that children under 13 get their parent’s permission before they start using a site).

Although Instagram says that one must be at least 13 years old to sign up for the service, the new ToS note that if a teenager signs up, he or she is agreeing that a parent or guardian is aware that their image, username and photos can also be used in ads.  But if an 18-year-old cannot legal contract for himself, how can he agree that his parents have consented either?  As one privacy advocate has noted, “If a minor can’t be bound to a contract in the first place, that same teen cannot agree to waive his or her rights.”

Furthermore, under Instagram’s new ToS, users who want to opt out must simply leave the site—there are no privacy options. What’s more, if a user initially agrees to the new ToS, but then has a change of mind, her information could still be used for commercial purposes.

While Facebook continues to be dealing with the effects of a class action relating to its privacy practices, Instagram seems to try and preempt steps to avoid a similar battle.  Its new ToS require a user with a legal complaint to pursue arbitration, rather than go to court.  The revised ToS also prohibit users from joining a class action lawsuit unless they mail a written “opt-out” statement to Facebook’s California headquarters within 30 days of joining Instagram. It is unlikely that many new users will do so, and many existing members will never have a chance to opt out—having joined Instagram ages ago.

Notably, that provision is not included in ToS for other leading social media companies like Twitter, Google, YouTube and even Facebook itself.  Professor Michael Rustand, a law professor at Suffolk University, notes that after reviewing ToS for 157 social media sites, he found that only 10 prohibit class action lawsuits.

The “Take It or Leave It” Model of Contracting

Consumer contracts are often “Take it or leave it” contracts, but many of them involve a once-off transaction like a sale of goods, or an ongoing relationship with more limited bounds.  Credit card companies focus on timely payments and interest rates.  Instagram is a social media service that collects lots of data about its users, much of it via visual imagery.   Consumers join social media sites under one set of terms and often find that such sites have a mission creep where more and more information is shared with third parties.  Some sites, give users a chance to opt out of particular types of sharing.

Instagram, with its new ToS, is not allowing customers to opt out of specific features. Rather, it attempts to impose a blanket use-and-privacy policy on its users.  Facebook, Instagram’s, owner, cannot do this itself, because it agreed to obtain affirmative user consent when it makes major privacy changes to the site.  Moreover, a preliminary class action lawsuit settlement with Facebook allows its users to opt out of being included in  “sponsored stories” ads that use and display their personal information.

Like Instagram, many free social media sites begin by amassing users by offering free access to useful services such as photo sharing or digital storage, free or charge.  At a certain point, their business model shifts when they need to monetize this business model—by offering more data to third parties.  And when this happens, the prior privacy protections and restrictions on use of personal data erode.  Right now, this seems like a bait and switch The Instagram debacle is an example of what is likely to come in the future, when such practices may become commonplace.

All told, Instagram’s revised ToS reflect a new potentially sweeping use and control over user content.

Your recourse? It’s simple. Change photo-sharing sites now.