The fallout from Instagram’s terms of service change that wasn’t actually changed continued Friday. Facebook, which owns the popular social media app, saw its stock price fall 3 percent amid a report that the TOS flap cost Instagram 25 percent of its users.
Whether that number is accurate — Instagram insists it isn’t — was almost beside the point as Facebook saw shares fall to $25.22 before gaining almost all of it back a few hours later. It is further evidence that Instagram completely blew it by ticking everybody off with the idea that it would license user photos to advertisers without telling, or paying, users. Instagram insists the whole thing was due to confusion over the rewritten terms, then made the point moot by reverting to advertising rules set out in the TOS published in April, 2010.
Friday’s dust-up started when AppData — a research firm that tracks user numbers for iOS, Android and Facebook apps — said Instagram had lost 25 percent of its users since attempting to change its terms of service. According to AppData’s numbers, Instagram had about 16.4 million active daily users last week, but only 12.4 million as of Thursday. It appears that the New York Post broke the story; it was followed by a dozen or so tech blogs. Wall Street got wind of it, and Facebook’s stock price started falling even as Instagram insisted the report was bogus.
“This data is inaccurate,” an Instagram spokeswoman told Wired by e-mail. “We continue to see strong and steady growth in both registered and active users of Instagram.” She declined, however, to quantify “strong and steady growth” and would not provide actual user numbers.
Investors appear to have gotten the message, because Facebook shares had rebounded to $26.03, just three cents less than Thursday’s closing price, by mid-afternoon Friday.
AppData, widely cited my major tech publications (and many mainstream news outlets too) as an authority on such matters, also reported user drops for Pinterest, FarmVille, and a number of other popular apps. But while AppData’s findings are generally considered accurate, they don’t appear to paint a full picture in this case. AppData’s metrics come from Instagram users who have linked the app to their Facebook accounts. According to a report from Marketing Land, only about 20 to 30 percent Instagram users have done this. While AppData indeed did record a drop in Instagram’s active users over the last week, it did so by measuring a slice of Instagram users, not the entire pie.
Although Instagram denies there’s been a decline in users, its refusal to offer specifics makes you wonder just what’s happened during the past week since we already know some users jumped ship.
Facebook Shares Fall Briefly Amid Report of Instagram Quitters
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Facebook Shares Fall Briefly Amid Report of Instagram Quitters
