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Global Jesuit Dialog on Business Ethics

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Instagram and the Ethics of Privacy

Monday, Feb. 4, 2013

Background

Founded in 2010, Instagram considers itself to be “a fun and quirky way to share your life with friends through a series of pictures.” By downloading the free Instagram mobile application (or app), users snap a photo with their mobile phone, then choose a filter to transform the image, and can share it on various sites such as Facebook and Twitter. The company views itself as more than just a photo-storage tool but a way “to experience moments in your friends' lives through pictures as they happen. We imagine a world more connected through photos.”

In April 2012, the 13-employee company was acquired by social networking giant Facebook for approximately $1 billion. In less than three years, Instagram has become one of the fastest growing social media platforms as seen by its estimated 12 million daily users.1

Dilemma

In December 2012, several months after being acquired by Facebook, Instagram announced new changes to its privacy policy and terms of use. According to the updated terms, "a business or other entity may pay Instagram to display users' photos and other details in connection with paid or sponsored content or promotions, without any compensation to you," and there was no apparent option to opt out.2 The backlash was immediate. Photographers and celebrities were particularly upset, given that their photos were a part of their own businesses and brand images.

Instagram was quick to respond that its intention was simply to improve advertising. Co-founder Kevin Systrom posted, “Our intention in updating the terms was to communicate that we’d like to experiment with innovative advertising that feels appropriate on Instagram. Instead it was interpreted by many that we were going to sell your photos to others without any compensation. This is not true and it is our mistake that this language is confusing. To be clear: it is not our intention to sell your photos.”3

Instagram's privacy policies and terms of use were once again updated in January 2013. The current terms state, “You hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post.”4 Instagram also reserves the right to share users information (including analytics information, log files, cookies, and location data, as well as the content users post) with companies affiliated with Instagram (mainly Facebook), third-party service providers, third-party advertisers, and “other parties.”5

While the initial backlash against Instagram has been quelled, there is still uneasiness among users regarding privacy issues. Instagram has to walk a fine line to keep its users happy and still turn a profit. On one hand, Instagram offers a free service to users, which up until this point has been free of advertisements, unlike other social media platforms like Facebook. In order to remain a viable company, Instagram has to bring in revenue somehow, and advertising seems the obvious choice.

Our Response

We believe that it is not unreasonable for Instagram to try to make money using member photos for several reasons. Firstly, it would be foolish for Instagram to walk away from such a lucrative revenue opportunity. On January 17, 2013, it announced the following powerful statistics6 :

  • 90 million Monthly Active Users
  • 40 million Photos Per Day
  • 8,500 Likes Per Second
  • 1,000 Comments Per Second

With staggering numbers such as these, how could a zero-revenue company not optimize these opportunities? And let us not forget that Facebook purchased the company for $1 billion in cash and equity in April 2012. Facebook owes it to its shareholders to try to monetize Instagram considering how much it spent on this company in addition to Facebook’s subpar performance since going public last year.

Secondly, users pay absolutely nothing for using Instagram's services; there is no price per photo uploaded, monthly/annual subscription required, or pricing scheme of any sort. Individuals and celebrities are not the only ones who derive personal benefit from Instagram, but businesses, too. Many small businesses like to use Instagram as a marketing tool because it is free and effective. For instance, some will upload pictures of new product arrivals to lure new and/or existing customers to come in and purchase. Not to mention, businesses like to have Instagram accounts because the service allows them to build their brand and customer loyalty through daily/weekly posts, thus, giving them the venue to engage and interact with customers in ways they could not do previously.

Question

How much, if any, of our information should Instagram be able to share with third-parties and advertisers? OR Why are Instagram users making such a fuss about the revised privacy policy if they are gaining so much personal satisfaction and/or business from a service that is free?

 

1 http://www.theatlanticwire.com/technology/2013/01/how-many-users-does-instagram-have/61139/

2 http://money.cnn.com/2012/12/18/technology/social/instagram-sell-photos/index.html?iid=s_mpm#comments

3 http://blog.instagram.com/post/38252135408/thank-you-and-were-listening

4 http://instagram.com/about/legal/terms/

5 http://instagram.com/about/legal/privacy/#section3

6 http://www.forbes.com/sites/tjmccue/2013/01/21/instagram-reports-90-million-active-monthly-users-plus-three-business-tips/

 

This ethics case was written by Alexis Babb and Amanda Nelson, both seniors at Santa Clara University and Hackworth Fellows in Business Ethics at the Markkula Center for Applied Ethics.

Comments Comments

Pinakpani Kashyap (Loyola Institute of Business Administration,Chennai) said on Feb 14, 2013
Web 2.0 has been the harbinger of a social networking revolution - where anyone can connect to anyone across this globe of ours and thus make our world a smaller and better place. But this dream of a global village has taken a sharp detour and the Utopian society thus envisaged has inherited monsters in the closet. When Orwell remarked that the Big Brother is watching us in his ground breaking novel "1984", he was not far from the truth. Instagram has been the latest example of how we are being fed the chimera of liberalism and a boundary-less knowledge and networking space, whereas on the other hand, the Big Brother is monitoring and analyzing our every move in the pretext of marketing or Big Data analysis or whatever new age jargon is prevalent now. Even though it might sound paranoid, this statement is not far from the truth. A sizable number of the new age netizens never go through the license agreements [the dreaded EULAs], let alone any modifications. Hence, this sizable number has no idea about the rights to a particular property [be it a photograph or a blog] they are replenishing when they upload them through these third party applications - until it is too late. So should there be a gross reform of how licenses are issued? Not really. But from an ethical point of view, any such services or applications that are in the social networking domain should ensure the following - 1. A clear, transparent T&C document devoid of any "lawyerisms". 2. Notifications on how one's information is used or is to be used. 3. A transparent list of one's clientele with regular background checks. - Like - 3 people like this.
Bastian K Ittyavirah (Loyola Institute of Business Administration, Chennai) said on Feb 14, 2013
The primary aim of any business is to make profit. "Nothing in this world comes for free". Any business when it offers you something for free, there is an aim to make profits in the future and not just customer satisfaction and happiness alone. It stands true in this case as well. We boast about ourselves as the tech savvy, educated people of the i-era, people of the social networking age. But at the same time, we never read any of the license agreements or any agreements for that matter. The mouse just goes directly to the ?I AGREE? option. It is our duty to read each and every line of it. And I don?t feel any problem in altering the terms, since it has already been mentioned in the license agreement. They are not trying to exploit the illiterate ones; instead they are exploiting the careless customers. The consumers should help themselves in this regard. It is their duty to read the terms before they sign up to any service. They are providing the service for free. One cannot actually complain against them for doing something with their pictures and information since a consent has been established in accordance with the terms and conditions. But Instagram should provide its users with an option to opt out of the service, if they are not willing to agree to the changed terms and conditions. When Instagram grew enormously with respect to the number of users, they found out new ways to make money out of it without charging the users. I don?t understand the big fuss about it. They are not forcing you to use their service. If you want to use you have to agree to their terms and service, else you need not use it. In this case, since the service is free, I doubt if the consumer can actually challenge the service provider on the terms. - Like - 4 people like this.
Eldho Poulose (Loyola Institute of Business Administration, Chennai) said on Feb 14, 2013
Instagram was a huge hit all around the world and it quite literally took over netizens? imagination by storm. Though it gained considerable fame, when it was launched through the Apple App store for iPhone, iPod and iPad, its growth actually coincided with the Android phenomena. When the support was launched for Android phones it became a real rage. Since then, everyone has been harping about how great an app Instagram was. True, the number of users that it boasts of is quite staggering to say the least. Hence, it is only natural that the people at Instagram are tempted to make money out of it. However, one thing that the service provider has to understand is that making money might in most cases be the aim of any business, but forcing something onto the consumer is never right. Instagram gained a huge following, partly because it was free to download and one did not have to pay for any services. If Instagram feels its customers are getting too much from them, it is their headache; they cannot say they will do what they like to earn profits. Over 90% of the netizens do not read any of the documents before they ?click? the ?agree? button, but it is not right on the part of a service provider to exploit the naïve customer. Instagram must make profits; it was acquired by Facebook and the shareholders who shelled out a billion dollars would want some returns on it. But, putting the users in a dilemma is not the answer. If they want to make profits, they must come up with a viable plan. They cannot take things for granted and use private pictures for their benefits; the users definitely have a right to be enraged. They started a billion dollar company and they cannot come up with a viable business plan that does not infringe on its users? privacy to generate incomes. In that case, it?s better for them to shut shop. Instagram was one of a kind when they began, but now there are a dozen such apps. Pheed is one such app which though might not be worth a billion dollars, but definitely has a business plan and is making money without annoying its users. Instagram has only one alternative - come up with a viable business plan or shut shop. The internet is a real big place and Instagram is just a drop in the ocean, if they do not manage to keep your customers happy they will die out soon. It?s a cruel world out there and many companies have tasted early success only to fall out of favour and die out when they tried to ?act smart?. Instagram- buckle up or die out! - Like - 1 person likes this.
Rohit George (Loyola Institute of Business Administration, Chennai) said on Feb 14, 2013
This article basically deals with how Instagram divulges personal information about its users and whether or not it should do so. I personally feel that Instagram shouldn't be disclosing personal information of any of its users, irrespective of the fact that it is a free application. Just because an enterprise has to make profit, doesn't mean that it can trade such secretly guarded information. What Instagram should do is to make it explicitly clear the information that is likely to be revealed to such marketing companies. In addition, the application should also provide users an option to quit if they are not happy with their personal information being sold to such third parties. - Like - 1 person likes this.
Chris Thomas (Loyola Institute of Business Administration, Chennai) said on Feb 14, 2013
If somebody decides to post information or pictures online, it is up to the owner of the information to define who should have access to it. That being said, the owner trusts the medium used to share (in this case Instagram). The medium has control over what should be done with the information. For example, google keeps a track of what sites we enter and accordingly pastes advertisements of our interests on our web pages - Like - 1 person likes this.
Lakshman Aram (Loyola Institute of Business Administration,Chennai) said on Feb 24, 2013
I think that this case involving the changing stance of Instagram raises some issues with the user, but their response should have been anticipated by Facebook. Even Facebook came under the customer?s scanner due to its fluctuating policies. Users worldwide want to access the best possible service at the least possible cost and when such a good service is free, they are bound to use it. Instagram, on the other hand, is also well within its rights to monetize the user base it already has and there is nothing wrong with that. Instagram is also right in having a suitable privacy policy and appropriate Terms & Conditions regarding the usage of the photos and other information under its purview. But the problem occurs when the concerning party keeps revising the privacy policies, putting the general public in doubt. If the users could be satisfied by ensuring that they understand the T&C and its precise importance, then these problems won't occur. Hence, it is not a problem with respect to monetizing of the business opportunity or the updated privacy policies and T&C by Instagram/Facebook. The issue lies with the lack of understanding of the policies by the user and the repeated updating of the T&C which has only confused the users even more. - Like - 3 people like this.
Phillip Gonzales said on Jan 16, 2014
Instagram is another social media tool that can be used for advertisement and leisure. The user uses instagram at its own risk. No matter the privacy policies that are implemented. If someone wants to hack your information they will do it. now days everyone is vulnerable to identify theft. As far as the ethics are concern with instagram and personal information or pictures being shared without permission is a violation as far as I am concerned. For example, facebook had to give more privacy to its users so it would be harder for people to invade your social media privacy without your permission. I believe that instagram should have privacy policies in place. Ultimately, the users is using this website at their own risk by logging on and creating an account. The know that the risk of their information and what they post can be shared not only by third parties but friends also. - Like - 2 people like this.
phillip gonzales said on Jan 16, 2014
However. Instances survives by how many users it obtains. Without new user accounts it would not survive long as a social media. - Like - 1 person likes this.
Nancy Franco said on Jan 16, 2014
As a user of Instagram, it really upsets me to know that they might be using my photos for commercial use yet I get no royalties for it even though it is my property that they are using. This makes me feel like they are taking advantage of us as a consumer. I prefer them to make money or profit in another way that keeps the consumer happy and keeps making Instagram money. I think it is ridiculous and it is very unethical to use someone?s content without pay. I understand they need to make a way to profit to keep the business up and running but using someone else?s property and in this case the photos, should not be the only way. I feel like it is an invasion of property as a consumer stand point. If I were the CEO of Instagram I would try to find ways to make money such as trying to get donations for the use of Instagram instead of paying a monthly or yearly fee. Also pay the people for their photos being used in advertisement at x amount of dollars per picture. I think people should wake up to the reality of things in how technology is booming in a good way and has many great opportunities for small businesses to flourish with a medium such as Instagram, but it has its downfall as well and this is one of them. I think the only way for Instagram to not get access to our precious moments frozen in time is by copyrighting them and then that way they would have to get consumers? permission for the use of their property and get the fair royalties for them. Overall I feel like it should not be legal because it is an unethical way of doing things, but there are always legal things going on that are very unethical going on in this world. - Like - 2 people like this.
Senyu said on Feb 9, 2014
After Instagram was founded, Instagram decided to make income by using its users photos, which created a debate over the ethics of privacy. This decision could be damaging Instagram users. This problem is more about what is legal as many people claim that Instagram is countering their privacy rights. On the other hand, Instagram claimed that they are not stealing any photos. Users would be able to choose whether they want to license their photos or not. In this way, instagram could still make income by using the permitted photos. The option that best respects the rights of all who have stake could also be that Instagram could introduce normal advertisements instead of Instagram could pay to the users for using their photos .Users would be able to choose whether they want to license their photos or not. In this way, Instagram could still make income by using the permitted photos. However, Instagram might not receive enough income. The amount of users who agree to license their photos on the Istagram without any benefits might be limited. - Like - 3 people like this.
joshua said on Apr 3, 2014
Instagram rocks just shut up and follow me ! - Like - 5 people like this.
dinaling said on Apr 10, 2014
youg ugly ass hell dude you dont get no followers - Like - 1 person likes this.
dingalin said on Apr 10, 2014
pinto head ah - Like - 1 person likes this.
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