Instagram’s Privacy Policy and Terms of Service Update: “The First One’s Always Free”

Sal Orofino

Sal Orofino

By Sal Orofino

Two thousand twelve, fittingly, did not end quietly.  Aside from the fact the world did not end in a fiery Mayan explosion, there was still plenty of heat generated in the worlds of  e-commerce and social media.  Folks, while I may sound like a broken record, convergences of events are finally starting to make the issues of legal rights in all things digital take center stage.  In their 2012 Annual Report, Under Armour cuts to the chase on the regulatory threat inherent in e-commerce and electronic data generally, “Any breach in our network may result in the loss of valuable business data, our customers’ or employees personal information or a disruption in business, which could give rise to unwanted media attention . . . .”   Instagram definitely did not get that memo!

In an apparent complete hijack of intellectual property, publicity and contract law, Instagram amended its Privacy Policy and Terms of Service in December of 2012 to include, amongst other changes, the following language:

“You agree that a business or other entity may pay us to display your username, likeness, photos . . . and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you. [emphasis added]”

The fall-out was instantaneous, powerful and even sparked a notably weak class-action lawsuit, Funes v. Instagram.  While the drafters at Instagram had a completely different outcome they were trying to accomplish, the misinterpretation and plain reading of the amended terms dealt a serious blow to the brand’s goodwill amongst users.  The intended consequence was to allow for advertising to co-exist with user-generated content as evidenced by the language allowing Instagram to “place . . . advertising and promotions on the Instagram Services or on, about, or in conjunction with your content.”  Seems fair for a free service, but like all things, it’s the presentation that matters.

While Instagram has since back-tracked due to its users voting with their fingers, the concern is still explicit in how modern day marketing platforms are built, particularly in youth and high fashion culture.  As we continue to advocate, if it’s too good to be true, it probably is.  The terms and conditions remain unchanged sans the removal of claiming ownership over user-generated content.  On his blog, the CEO of Instagram had this to say to his customers:

Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work.

You also had deep concerns about whether under our terms, Instagram had any plans to sell your content.  I want to be really clear: Instagram has no intention of selling your photos, and we never did.  We don’t own your photos – you do.

Finally, there was also confusion about how widely shared and distributed your photos are through our service.  The distribution of your content and photos is governed by our privacy policy, and always has been.  We have made a small change to our terms to make that as clear as possible.

All is still not well in Instagram-land.  Instagram kept its arrogant language that it may amend its privacy policy and terms and conditions “whenever we want,” and there is still a lack of clarity for its existing privacy policy language that states “[o]nce you have shared User Content or made it public, that User Content may be re-shared by others . . . .”  What does that mean, exactly?

A broader view of this debacle suggests the winds of change are beginning to howl.  The intersection of so many stakeholders and the cadence of change make this a completely necessary area to stay abreast of.  In e-commerce, we are all being touched by legal liability, business interruption risk, technological advances, user adoption pressure, market gains or losses and political engagement.  The White House, under President Obama, has made it clear that it will find a way to broadly implement “Transparency by Design.”  That theme will find expression in Terms and Conditions and Privacy Policies.  The Federal Trade Commission stands to be the big stick Obama and team will use to ensure compliance and the ever-present privacy legal bar stands licking its chops in anticipation.

As an anecdotal aside, the very concept of ownership runs in many silent places and needs to be flushed out and disclosed.  Social media accounts, web domains, coding, Twitter handles all relate directly back to who holds the rights and how those rights impute responsibility.  Instagram is an excellent lesson heading into 2013 that the fine print may not be pretty, but it sure is powerful.  Make sure you take some time out to conduct an audit on your digital platform.  You can bet Instagram will from now on!

About the author:

Orofino is the Principal of The Orofino Law Group, PLLC, specialized law firm providing in-house counsel to apparel and sports manufacturers that has represented brands like RVCA, WeSC and Metal Mulisha.  Orofino also forms comprehensive integrated estate plans for some of the best athletes in action sports.  He can be reached at (305) 790-2336 or by e-mail at salva@orofinogroup.com