Instagram reportedly loses 25 percent of users: What's going on?

Instagram, the popular photo-sharing application for phones, may be closing the year on a low note. After seeing explosive growth for much of 2012 and peaking at 16.4 million users, the New York Post reports that Instagram's daily active users have fallen to 12.4 million, according to AppData, which tracks usage rates of Facebook applications like FarmVille. "[We are] pretty sure the decline in Instagram users was due to the terms of service announcement" on Dec. 17, AppData told The Post. In the policy switch, Instagram, which Facebook bought earlier this year, claimed the right to sell user-generated photos to advertisers, but quickly reverted back to its old wording after users far and wide — including the likes of Justin Bieber and Kim Kardashian — freaked out and threatened to leave the service. "It is not our intention to sell your photos," co-founder Kevin Systrom told users in a blog post. Is Instagram really bleeding users?

"The Post is flat-out wrong," says Zachary M. Seward at Quartz. AppData only looks at Instagram accounts connected to Facebook, which is a partial subset of its overall user base. "Instagram released its new terms of use on Dec. 17, igniting controversy almost immediately, but AppData doesn't show any significant decline in usage until Christmas." That doesn't make sense.

While the numbers might not mean much, the trend is still interesting, says Jay Yarow at Business Insider. The drop on Christmas day is strange, sure. But personally, "I was using Instagram more around Christmas, and so were my friends."

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In any case, the language set out before users when they sign up for a new service is still an impenetrable garble of legalese. Small wonder most people glaze over the details, law professor Eric Goldman tells The New York Times. "The lay audience usually misreads these complicated and nuanced contract provisions, resulting in histrionics ("they 'own' me!") or platitudes ("it says right there in the TOS that users own their own data"), neither of which is quite right."

And this is bad news for users going forward, says Nilay Patel at The Verge. Start-ups often use this kind of dense, formal language to allow for abrupt strategy shifts later (Instagram converted from a location app to a photo app early on). By changing its TOS language to something more modern and understandable, all Instagram really did was invite unwanted criticism. "The Instagram debacle is destined to be discussed in boardrooms and business schools for years to come as an object lesson in keeping terms of service vague and hard to understand." That means instead of easy-to-understand usage terms that we all dream of, we'll instead get more of the same.