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Furor Over Change at Facebook's Instagram Leads to Lawsuit

Posted on 27 Dec 2012 by Neilson

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Instagram lawsuitA user of Facebook Inc.'s Instagram has filed a proposed class action lawsuit in the wake of a public outcry over a policy change at the photo service that could have enabled advertisers to exploit users' images.

In a complaint for alleged "violation of the implied covenant of good faith and fair dealing," filed in U.S. District Court for the Northern District of California, plaintiff Lucy Funes says Instagram has sought to take its customers' property rights while denying them the ability, should they have a problem with Instagram's "scheme," to retrieve their content after they cancel their accounts.

"In short, Instagram declares that 'possession is nine-tenths of the law and if you don't like it, you can't stop us,'" Ms. Funes claims.

A Facebook spokesman said in a statement, "We believe this complaint is without merit and we will fight it vigorously."

Instagram was acquired by Menlo Park, Calif.-based Facebook earlier this year in a cash-and-stock deal initially valued at about $1 billion, when Facebook's shares were pegged at $31 apiece. Shares in the social site are now trading at roughly $27.

Instagram says it has more than 100 million users.

Early last week, the photo service announced it was amending its policies to enable advertisers to make use of users' content in ads. The move stirred a significant backlash, and Instagram later in the week said it would roll back that section of the new terms of service.

"We failed to fulfill what I consider one of our most important responsibilities: to communicate our intentions clearly," Instagram founder Kevin Systrom wrote in a post on a company website. "I am sorry for that, and I am focused on making it right."

"Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work," Mr. Systrom wrote, adding, "I want to be really clear: Instagram has no intention of selling your photos, and we never did. We don't own your photos--you do."