Did Instagram’s Terms Of Use Flop Hurt Facebook?

By Justin Lafferty 

After mass confusion over Instagram’s updated terms of use, several users took to Facebook and Twitter to express their outrage over the company supposedly selling photographs. But how many people actually stopped using the application? A report in the New York Post dubiously claimed that Instagram has lost one-quarter of its users, but the math used in the story is a little fuzzy.

Last week, many users misinterpreted a section of Instagram’s updated terms of use to mean that the site would start selling photos to advertisers with no warning or benefit to the mobile photographer. In reality, Instagram was preparing to launch a product similar to Facebook’s sponsored stories, utilizing users’ names and likenesses to promote products with which they’ve connected. Instagram later backtracked and eliminated this portion of the new terms of use.

The Post wrote — citing AppData numbers — that Instagram recently lost nearly one-quarter its daily active users, but the tabloid failed to take into account that AppData’s figures only track those who have connected to Instagram via Facebook. Inside Facebook notes that this is only a fraction of Instagram’s user base. Inside Facebook also pointed out that Instagram weathered similar dips in DAU throughout holidays, when people were probably too busy to use the app (and other apps).

A Facebook spokesperson refuted the Post story:

The data are inaccurate. We continue to see strong and steady growth in both registered and active users of Instagram.

Among Facebook-connected Instagram users, the DAU fell from a high of 16.4 million Dec. 19 (Instagram posted its new terms of use Dec. 17) to 12.4 million Dec. 27.

The news of Instagram’s lost users apparently had an affect on the stock of parent company Facebook. After closing Thursday with a value of $26.05 per share, it fell sharply on Friday to $25.25 before picking back up.

Readers: Do you think that Instagram’s terms of use fiasco had any effect on Facebook?