Instagram updates terms of use to include potential for Sponsored Stories

Instagram today introduced a new privacy policy that will allow data sharing with Facebook and a new terms of use agreement that includes language suggesting that an advertising product similar to Facebook’s Sponsored Stories could be in the app’s future.

Instagram is updating its terms to reflect its new ownership by Facebook, just as Facebook recently amended its data use policy to allow data to be shared among its affiliates. Instagram notes that nothing has changed about who can see a user’s photos, but explains:

“Our updated privacy policy helps Instagram function more easily as part of Facebook by being able to share info between the two groups. This means we can do things like fight spam more effectively, detect system and reliability problems more quickly, and build better features for everyone by understanding how Instagram is used.”

Logically, this may also involve sharing data for advertising purposes. Facebook has been aggressively monetizing its own mobile app through Sponsored Stories and a number of new ad units this year. It’s unclear how long the company will wait before bringing ads to Instagram, but when it does, they may include social context similar to ads on Facebook. New language in Instagram’s terms of use states:

Some or all of the Service may be supported by advertising revenue. 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.

This addresses an issue that came up with Facebook’s Sponsored Stories product. The company was recently faced with a class action suit where users claimed they deserved compensation for having their name and photos included in ads. Facebook agreed to a $20-million settlement, which includes a cash payment of up to $10 to Facebook users who objected to this use of their information. It continues to use people’s names and images along with Sponsored Stories.

Instagram may offer similar units in the future. An advertiser might pay to promote stories about users following their brand or liking one of their photos. There might also be a way in the future for advertisers to promote user-generated photos to their friends, for example including a Like or follow button to help companies build an audience.

Instagram’s updated terms of use and privacy policy of use will go into effect on Jan. 16, 2013. The existing terms can be viewed here. The existing privacy policy is here.

Related article: How Facebook could monetize Instagram