Though Instagram in the blog post says that the "updated terms of service help protect you, and prevent spam and abuse as we grow," it does not highlight the clause 2 under Rights which says, "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 means that Instagram can sell your images and data to third parties without taking your consent and also without having to pay you for that.
Facebook was also sued by users in 2011 for using images without consent and the case was finally settled in June this year. Facebook had pay $10 million to settle the suit. Yahoo had in the past tried to enforce similar terms, but had to back down.
Users have not reacted kindly to the news. Selected responses from Twitter.
@lostart: Dear Instagram, please change your name to more adequately portray your abusive terms of service: instaGRAB!
@kidzrevil: So instagram is turning itself into a stock photo agency. A stock photo is kinda like a template a company could buy to make an ad with.
@justimage: Not surprised Facebook's Instagram is evil. Sadly, I think people will still use it. Big blow to photographers.
@prague360: Goodbye instagram. I'm uninstalling you now. I never want to see you again
@ReformedBroker: Facebook's terms of service changes to Instagram are hilarious. It's like they want us to hate them
@markonen: I am basically trusting that enough of you guys will delete your Instagram accounts to reverse the policy without me having to do anything.
@bozoskeleton: Never been happier that I don't Instagram: now they want to sell users' photos because they own them!
@buzzbishop: Just in case you thought @instagram was trustworthy and wont do evil, look what they did to
@jdross: Heh... apparently even Zuckerberg's wedding photographer isn't a fan of the new Instagram.
@MarcelloNine: I guess Instagram has wrote their suicide note!