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MELISSA BLOCK, HOST:

Instagram was bought by Facebook earlier this year for close to $1 billion. At the time, the photo-sharing service was just two years old. And not only was Instagram not turning a profit, it wasn't earning any revenue. That is about to change. Yesterday, Instagram updated its privacy policy and terms of use to pave the way for more paid ads next year, but the move caused a kerfuffle. NPR's Steve Henn joins us now to explain what happened. And, Steve, what specific changes was Instagram proposing that got them to such a mess?

STEVE HENN, BYLINE: Well, there were quite a few. First, Instagram said that starting next year, it would share all its user data with Facebook and vice versa. This would let advertisers target users more effectively and allow the company to collect sort of a more detailed picture of your interests and your friends.

But that was really just the beginning. What really seem to anger many Instagram users was a clause that said Instagram would begin to allow advertisers to pay it to display your name, your information and, critically, your photos as part of ads. And there were a couple pretty aggressive touches to the new terms of service. You know, Instagram's enormously popular with teenagers. There was a clause in the terms of service that said any teens who used Instagram acknowledged that their parents knew their images could end up in ads and their parents approved.

And then finally, Instagram added one more wrinkle, saying that it might not always tell you when the photo you were looking at was actually an ad.

BLOCK: Hah. And all of this spawned a huge backlash.

HENN: Not surprisingly, there were really loud complains. A number of early Instagram adopters deleted their accounts and blogged about it. Privacy advocates pointed out that using people's images and ads without paying for them or getting their consent could violate state publicity laws. And several services that back up Instagram photos reportedly had very busy days backing up and transferring images as many users said they were preparing to delete their accounts.

BLOCK: And now, some sort of change of heart from Instagram, right?

HENN: Well, that's right. This evening, Instagram backed down, or at least appeared to. In a blog post, the company's founder, Kevin Systrom, wrote, quote, "It's not our intention to sell your photos." And he added that Instagram didn't have any plans to feature users' photos in advertising either. So he said the company would remove that language from their new terms of service.

BLOCK: You know, Steve, looking at the language from Instagram tonight, it does seem that they're chalking this up to a big misunderstanding. They're saying the policy originally was misinterpreted, it may have been confusing. I don't know that that's really what happened here.

HENN: You know, I agree with you on that. I read the language pretty carefully. And as far as legalese goes, the changes in their terms of service, I thought, were very clear. The other interesting thing to note is that this fits a pattern that we've seen from Facebook in the past, which now owns Instagram. Facebook has become sort of infamous for pushing its privacy policies and its terms of service as far as possible, and then if there's a backlash from their users, backing down a little bit but not on everything.

And that's really what Instagram did tonight. They may not use your photos in ads, but they're still going to collect information about you, use it to target ads. They'll use information they've collected in ads, and they haven't said that they will clearly label all of those ads as ads.

BLOCK: NPR's Steve Henn. Steve, thanks so much.

HENN: My pleasure.

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