Two months later, what’s the fallout? Well, nothing. Instagram’s new rules went in place in January and the site appears popular as ever (based on my own experience and Facebook’s optimism on a recent earnings call).  Meanwhile, Instagram this week issued a stinging rebuke to Lucy Funes, the California woman who is leading a class action suit against it.

In a filing to dismiss the suit, Instagram’s lawyers said the case was based on “wrongheaded, even frivolous, legal theories.” The document, reported by Reuters, added that Funes’ alleged injury was “self-inflicted” and pointed to “her failure to take the self-help measure of deleting her account.” (our emphasis)

The comments are harsh but also fair. Instagram, and every other social media company, is right when it points out that no one is forcing people to use their service and that, if you don’t like their rules, you can just leave. Instagram notes that Funes is still using the service.

This take-it-or-leave-it approach may be exasperating to consumers who feel powerless as Facebook and others turn them into product pitchmen (Instagram will follow suit soon enough). But for now, the licenses these companies impose ensure the law is on their side and, as long as people don’t pay for sites like Gmail and Twitter, advertising is the only option that will sustain them.

Unfortunately, companies that do try to be transparent about their advertising intentions are likely to be punished for their efforts. As Verge reporter and former copyright lawyer Nilay Patel explained in December, the controversy over Instagram only creates an incentive for companies to be obtuse or sneaky about their terms of service in the future.

This doesn’t mean, of course, that everything is okay. Instagram and the other companies do pose serious threats to our privacy, data and dignity. But until there is a system in which consumers have an option to pay these companies to leave us alone (would you pay $5 a month for ad-free Facebook? — I might), this is the world we’re stuck with.

The Instagram episode ultimately reflects a familiar pattern of hysteria, resignation and forgetting. There will be other examples soon enough.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Social media in Q1: commerce and discovery dominated
• Controversy, courtrooms and the cloud in Q1
• 12 tech leaders’ resolutions for 2012

In case you missed it, a San Diego law firm this week sought to run to the rescue of Instagram users who are upset that the site will change its terms of service in January. These new terms are meant to help Instagram introduce advertising practices akin to its new parent company, Facebook, which turn users into pitchmen for products.

The lawsuit, which came after weeks of uproar about the maladroit way in which Instagram rolled out the proposed changes, made for good headlines. Too bad, then, the case stands as much chance of success as that petition to deport CNN’s Piers Morgan.

Writing on Eric Goldman’s respected Technology and Marketing Law Blog, Seattle lawyer Venkat Balasubramani described the case as “flimsy,” “borderline frivolous” and “an example of lawsuits against social networks gone completely amok.”

Balasubramani, who tracks social media cases closely, points out that that the revised terms haven’t even gone into effect (meaning that users can simply leave) and that, in any case, Instagram has the right to change its terms of service if it darn well pleases. You can see the full take-down, including Goldman’s view, here.

So why are the good folks at Finkelstein & Krinsk law firm filing this case in the first place? My own hunch is that it’s a way for the firm to get on the radar as part of California’s growing cottage industry of privacy lawsuits. This involves law firms who wait for the latest privacy outrage, and then race each other up the courtroom steps to file a case. Next, they ask for Facebook (or whoever) to pay them as part of a “privacy settlement” which typically compensates lawyers and activists — but not the users whose privacy was breached. In this case, though, the only payout Finkelstein & Krinsk are likely to receive is a clobbering by Facebook’s veteran legal team.

Overall, the Instagram episode is just the latest example of the ritualistic cycle of complacency-outrage-resignation that occurs whenever users discover that websites like Facebook and Google are providing a free service in exchange for advertising data.

(Image by ollyy via Shutterstock)

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Controversy, courtrooms and the cloud in Q1
• Readers weigh in: future prospects for Twitter
• Social media in Q1: commerce and discovery dominated

Instagram originally released the updated terms on Monday, setting off a firestorm of complaints from users who disliked the new terminology that said “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.” The update on Tuesday said the company was listening to its users, had no intention to sell their photos, and would not retain ownership over the images. It said: “We are working on updated language in the terms to make sure this is clear.”

But in a blog post Thursday, Instagram co-founder Kevin Systrom wrote that the company would be going back to the original terminology for advertising-related issues, rather than putting a new terms of service into place as the company said it would Tuesday, and using the original language from 2010:

“Earlier this week, we introduced a set of updates to our privacy policy and terms of service to help our users better understand our service. In the days since, it became clear that we failed to fulfill what I consider one of our most important responsibilities – to communicate our intentions clearly. I am sorry for that, and I am focused on making it right.

The concerns we heard about from you the most focused on advertising, and what our changes might mean for you and your photos. There was confusion and real concern about what our possible advertising products could look like and how they would work.

Because of the feedback we have heard from you, we are reverting this advertising section to the original version that has been in effect since we launched the service in October 2010. You can see the updated terms here.”

An Instagram spokeswoman confirmed that the company decided to revert to the old terms of service because it doesn’t yet have immediate advertising plans to put in action, and that they’ll update the language when they do.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Readers weigh in: future prospects for Twitter
• The evolution of consumer-media cloud storage
• Social media in Q1: commerce and discovery dominated

Monday morning the company released an update to its terms of service, set to go into effect on Jan. 16. The new terms had a good deal of phrases that users disliked, especially related to how Instagram might connect user content with advertising, and the internet collectively freaked out. While some of the response was certainly over-hyped, Instagram eventually realized it needed to clarify, and the company released a note to users on Tuesday afternoon that said it was listening and would alter some of the terms.

The reaction engaged average consumers in a debate that the technology and publishing worlds have been engaged in for some time now: Namely, that when consumers don’t pay to use a service, their data and information becomes the product, and that product can go up for sale (although of course this concept has its limitations.)

On Monday, several journalists and consumers articulated why they found the updated terms problematic, including Wired’s Mat Honan, who like many users, wrote that he was quitting Instagram on Monday:

“The issue is about more than using photos of my baby daughter, or deceased grandmother, in ads. The greater concern should be that the company would forge ahead with such a plan without offering any other option to the very users and data that built it.”

But many others weren’t as sure. Kevin Roose writing for NYMag reminded us that monetizing a user’s content with advertisers is how most social media companies make money, and Instagram is no different:

“Do people even know how the Internet works? The entire point of starting a social-media company is that it gives you the ability to make money by advertising things to people. Facebook does it by selling packets of user data to companies like Wal-Mart. Twitter does it by tacking promoted tweets onto your search terms. Gmail does it by showing you ads for Lean Cuisine next to your mom’s e-mail reminding you not to binge-eat during the holidays.

This is called “monetization,” and we have come to accept it as the inevitable price of getting cutting-edge Internet services for free. But now that Instagram, too, has decided to monetize, we are outraged.”

Artists and professional photographers in particular were incensed by the idea that their creative work might belong to the service that could then re-purpose it:

Oh boy. @Instagram's new terms of service embody just about everything that's wrong with the ad-supported web j.mp/Uav6Dg—
Maria Popova (@brainpicker) December 18, 2012

But once Instagram recanted on Tuesday, clarifying that it doesn’t want to sell your photos or turn you into an advertisement, the resulting reaction was more mixed:

BREAKING: @Instagram backs down on selling photos to advertisers. Sorry, but that they even TRIED is why I’m leaving. apne.ws/12yDfnh—
Tod Maffin (@todmaffin) December 18, 2012

Instagram users are upset content may be used without compensation. Yet people continue to illegally download books & music #HypocrisyIsFun—
The Dark Lord (@Lord_Voldemort7) December 18, 2012

too late. I'm back to Flickr. “@newsycombinator: Instagram's official response j.mp/U79Nld”—
Gen Kanai (@gen) December 18, 2012

Seriously wondering why @instagram couldn't say flat-out "We will never sell your photos."—
Craig Kanalley (@ckanal) December 18, 2012

Spoiler Alert: Instagram already sold all your photos. For a billion dollars.—
Geoff Stearns (@tensafefrogs) December 18, 2012

Nothing’s free. If you’re not the customer you’re the product.—
Mike Monteiro (@Mike_FTW) December 18, 2012

I am sure there is a Great Lesson for all Founders and CEOs to be learnt from the whole Instagram TOS situation …—
Shakil Khan (@shak) December 19, 2012

A clarification of ToS and tardy acknowledgement of user dissatisfaction won’t overcome overwhelming wave of anti-Instagram sentiment.—
Peter Skerritt (@PeterSkerritt) December 18, 2012

Btw, people freaking out over @instagram should read their credit card ToS. They own you.—
Hunter Walk (@hunterwalk) December 18, 2012

Most interestingly, not everyone was assuaged by Instagram’s response. National Geographic, still one of America’s greatest symbols of photography, posted that it was suspending its Instagram account and would close it unless changes take place:

And for some celebrities, the changes still spell concern as well:

might be saying bye bye to Instagram 😞 …hope something changes.—
Kendall Jenner (@KendallJenner) December 18, 2012

And it’s possible that the Instagram terms of service parody account explained the company’s stance best of all:

Hey RT if you're like totally over that whole misunderstanding thing! Please?—
  (@InstagramTOS) December 18, 2012

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Readers weigh in: future prospects for Twitter
• Controversy, courtrooms and the cloud in Q1
• Flash analysis: future opportunities for Pinterest

The combination of user data — which could make your Instagram photos fuel for Facebook’s geolocated advertising, or create a unified profile that’s difficult to separate – certainly creates privacy concerns for users, but makes sense as Facebook works to increase monetization and improve its ability to target advertising, which is a huge part of its business. Abolishing the user vote on changes reflects the remarkable growth in users the company has seen in the past few years, but again limits users’ ability to control what might happen to their data. Facebook first began the process in 2009, when it had about 175 million users (it now has over one billion).

Facebook, which closed the deal on its Instagram acquisition in September, could end up with the user data of more than 100 million registered Instagram users, and told Reuters that it would combine data from its divisions to ”help provide, understand, and improve our services and their own services.”

Previously, changes to Facebook’s terms of service or policies needed a vote from 30 percent of users. But the vote was triggered if users created more than 7,000 public comments on a topic — which encouraged quantity rather than quality — and it was difficult to reach 30 percent participation on votes, Facebook explained in a blog post:

As a result of this review, we are proposing to restructure our site governance process. We deeply value the feedback we receive from you during our comment period. In the past, your substantive feedback has led to changes to the proposals we made. However, we found that the voting mechanism, which is triggered by a specific number of comments, actually resulted in a system that incentivized the quantity of comments over their quality.  Therefore, we’re proposing to end the voting component of the process in favor of a system that leads to more meaningful feedback and engagement.

Obviously cognizant of user distrust at the company’s privacy policies and use of highly personal data, Facebook is planning an “Ask the Privacy Officer” feature, allowing users to submit privacy-related questions to Chief Privacy Officer of Policy, Erin Egan, and Egan will host webcasts to address privacy concerns.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Google doesn’t like walled gardens — except its own
• Controversy, courtrooms and the cloud in Q1
• Readers weigh in: future prospects for Twitter

As reported by the Electronic Frontier Foundation, Craigslist is no longer requiring users to give it permission to bring lawsuits against other sites that reproduce users’ ads.

The once-popular Craigslist has come under withering criticism by Silicon Valley in recent weeks for its decision to sue apartment site PadMapper and to threaten other sites that are using its listings. The critics complain that upstart sites like PadMapper offer useful new services and user-friendly designs while Craigslist’s own design is out-dated and unwieldy.

Craigslist’s decision to give up its exclusive license demands may be a tactical move rather than a change of heart. As we’ve explained before, its exclusive license claims appeared to be unenforceable in the first place.

Meanwhile, Craigslist has given no indication that it will stop its campaign against rivals or backtrack on its decision to remove its listings from search engines. At the same time, the “moderation” section of its terms of service are now jammed with terms that appear aimed at other sites:

CL has the right .. to regulate content … including but not limited to automated and manual screening, blocking, filtering, exclusion from index pages, exclusion from search results, requiring the use of an application programming interface (API), requiring the use of a bulk posting interface, authorization, verification, and the deletion and/or termination of content, accounts and/or all or any use or access)

(Image by Andy Dean photography via Shutterstock)

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Flash analysis: Collaborative consumption – a first look at the new web-sharing economy
• Social media in Q1: commerce and discovery dominated
• Controversy, courtrooms and the cloud in Q1

In case anyone missed it, Craigslist last month sued PadMapper, a popular site that helps people find apartments by showing listings (including ones from Craigslist) on a map. This week, Craigslist clamped down further on potential rivals by changing its terms of service.

As reported by the blog Baligu, Craigslist has made the unusual decision of telling users it has an exclusive license to the copyright in their listings. In practical terms, this means that if you decide to sell your bike on Craigslist and another website picks up that listing, Craigslist can sue the other site.

The problem here is that Craiglist doesn’t have much of a legal leg to stand on. According to law professor Richard Gold, an intellectual property scholar at McGill University, it’s difficult to assert copyright over the simple facts in a classified ad:

“There are only a few ways to advertise a given object and copyright cannot be used to prevent the listing of the same object on another service. Since the wording of the ad will inevitably be very similar, the copyright protection would be thin.”

Gold adds, “There are obviously anti-trust concerns here as well.”

So why is Craigslist going on a limb with such a shaky legal claim? The best guess is that it’s a bluff intended to scare off other small companies that tap into its listing.

In the short term, the legal shtick might frighten people into letting Craigslist keep tight control of its listings. But in the longer term, it seems certain to exacerbate the ill will building up toward the site and its founder, Craig Newark (who today published a meditation about remaining serene in the face of online insults).

(Image by CREATISTA via Shutterstock)

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Social media in Q1: commerce and discovery dominated
• Controversy, courtrooms and the cloud in Q1
• Pinterest reawakens Napster-style debate over copyright

Now New York resident Robert Herskowitz wants to represent everyone in the country in the same boat. In a complaint filed in San Francisco, Herskowitz wants Apple to pay back everyone who was allegedly charged for double downloads. He also wants special damages and for Apple to change its refund policy.

The case appears to hinge on the terms of service for the iTunes store which requires all users to agree to its no refund policy.

The iTunes rules provide for a refund only if an item doesn’t download or if there are technical problems.

Herskowitz’s complaint stems from December of 2010 when he downloaded 22 songs from iTunes. He claims that he was billed twice for one of them, paying $2.58 rather than $1.29 for “Whataya Want from Me.” The song is by an American Idol runner-up.

Herskowitz claims he wrote to Apple to recover the $1.29 but simply received an automated reply that described the no refund policy.

The lawsuit is based on breach of contract and on California consumer protection laws.

Apple is also facing a separate iTunes related class action brought by parents over so-called “bait apps” — apps that are free but on which children can rack up bills through in-app purchases.

Apple did not immediately reply to an email request for comment.

You can view the complaint at Justia which was first to report it.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How social discovery is transforming entertainment
• CES 2012: a recap and analysis
• Forecast: the future of the digital music industry

You can learn about TOSBack here. TOSback keeps track of TOS agreements for popular web sites and apps, and highlights whenever they change — so that if a site decides to make an unreasonable change to its content ownership policy, for example, you’ll be notified and can decide to stop using it.

Among the sites with policies that TOSBack tracks are Yahoo, Facebook, Flickr, Google, GoDaddy, Twitter, MySpace, Amazon, eBay and more. The site does just what it says. If there is any change in, say, Facebook’s published privacy policy — as there was on June 2nd according to the TOSBack site — then a change notice will be posted. TOSBack does a nice job of presenting the Before and After views of policy changes when they occur, as you can see here, and in the screenshot above.

Many high-profile sites have gotten in hot water over TOS issues in recent years, with Facebook probably generating the highest profile issues. More than once, Facebook has reverted to previous Terms of Service policies in the face of backlash from its enormous user community. Google, too, drew fire when it first released its Google Chrome browser, due to overly loose language regarding how the company would treat data on usage patterns. It’s surprisingly common for TOS agreements to be unreasonable. TOSBack looks like one of the most far-reaching efforts to police the problem yet.

Let us know your thoughts on TOSBack in the comments.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Personal tools lead to practical business
• Millennials in the enterprise, part 1: strategies for supporting the new digital workforce
• A 2011 NewNet Forecast

Earlier this week AT&T revised its wireless plans to limit data services. The move effectively declares that AT&T doesn’t have to transfer third-party video over its wireless network. This would negatively impact Sling mobile applications, including its planned iPhone release, and potentially 3G video-streaming apps like CBS’s for TV.com. It also means AT&T isn’t abiding by net neutrality standards common for wired networks on its 3G wireless network.

As the Public Knowledge Policy Blog points out, the AT&T Wireless terms of service now explicitly prohibit “downloading movies using P2P file sharing services, customer initiated redirection of television or other video or audio signals via any technology from a fixed location to a mobile device, web broadcasting, and/or for the operation of servers, telemetry devices and/or Supervisory Control and Data Acquisition devices.”

AT&T also spells out overage prices for mobile data, and says it won’t carry unused data to the next month.

On the 5GB DataConnect Plan, once you exceed your 5GB allowance you will be automatically charged $0.00048 per Kb for any data used. On the 200MB Data Connect Plan, once you exceed your 200MB allowance, you will be automatically charged $10 for an additional 100MB.

Wireless networks don’t presume to be neutral like the Internet — operators have bought the rights to do whatever they want with their wireless spectrum – but this could set new precedents for cramping developers’ and users’ style.

An AT&T spokesperson said he is looking into the matter for us. Meanwhile, Sling Media spokesperson Jay Tannenbaum commented via email, “Even with high quality of the stream that we provide we have never really encountered any complaints about exceeding the 5gig cap. What we strive to do is offer the best quality while shielding the user from carrier bandwidth constraints.”

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• What the shift to the cloud means for the future EPG
• How consumer media will change in 2013
• OTT technologies and strategies for broadcasters