Facebook Inc (FB) Faces $250 Million Loss As Instagram Users Flee

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Facebook Inc (FB) Faces $250 Million Loss As Instagram Users Flee

Instagram users annoyed with new rules, carried out their threats to dump the popular photo-sharing app. The app acquired by Facebook Inc (NASDAQ:FB) earlier this year for $1 billion, has lost nearly a quarter of its daily active users owing to the debacle.

“[We are] pretty sure the decline in Instagram users was due to the terms of service announcement” on Dec. 17, AppData told The Post.

As per the data, Instagram’s active daily users had fallen to 12.4 million as of yesterday, from the peak of 16.4 million the week it rolled out its policy change, according to The New York Post. The number is equal to a 25% drop, which would mean a $250 million loss for Facebook. The company changed its service terms last week to incorporate advertising. The new terms allowed the company to sell user photos for advertising and promotions “without any compensation to you.” It is impossible to tell if the new terms of service put in place by Instagram came from inside the company, from Facebook Inc (NASDAQ:FB), or was the product of a dialogue between the two companies.

The move caught mass resentment, with celebrities including Kim Kardashian and Justin Bieber expressing outrage. Though Bieber withdrew his threat to leave, but as of yesterday Kardashian, the most followed user, hadn’t posted a picture of herself since the debacle.

“Those online service providers are asking for something in return,” says David Fewer, director of the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic at the University of Ottawa.

“They’re not providing their services for free and if you’re not paying with money, you’re paying with something else.

“That’s true all the time whether they’re using your images or just using the information they glean from your website or whether they’re following you around on the internet in some way.”

When the posts for #boycottinstagram popped up on Twitter, Kevin Systrom, the CEO and co-founder tried to make up by passing the incident as a big misunderstanding, but the damage was already done. Meanwhile, Instagram has reverted to its old policy.

There has been no confirmation from the company about the subscribers deleting their accounts, but the app data clearly shows the decline. The steep fall in users is a big one for the 2-year-old service, which claimed to have its busiest 24 hours to date over Thanksgiving, with users sharing 10 million photos — mostly of food. There has been no such announcement about Christmas, but AppData claims the users had fallen to 12.5 million for Christmas from 14.5 million active users on Thanksgiving.

civil class action law suit was filed against the company last week. The suit charges Instagram with breach of contract and was filed in San Francisco. Facebook Inc (NASDAQ:FB) has pledged to stand behind Instagram in this; its first major lawsuit. A Facebook Inc (NASDAQ:FB) spokesperson alleged that the complaints brought against Instagram were without merit.

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