Class action lawsuit over instagram furor -FB

A lawsuit was filed in California (San Francisco) Federal Court by Lucy Funes an individual user, of Instagram in joinder with several other users, demanding Instagram to stop changing the terms of service. Instagram; a social networking site which allows users to edit the pictures for free and post them readily on the internet, has been recently bought by Facebook for $715M.

Instagram changed their terms of service last week allowing use of subscribers’ pictures for advertisements without permission or royalty to the owners. It has also introduced a mandatory arbitration clause.

It claimed that users can close their accounts but would have to forfeit their proprietary rights to all pictures already posted; the arbitration clause still holds true. The CEO of Instagram, Kevin Systrom contends the amendments cover almost nine tenths of  legislative requirements and nobody can stop it from changing the terms.

This resulted in an outrage after which the company rolled back the terms partially.

Facebook, currently the owner of Instagram has already faced a similar case when it went live with changes  where users were not allowed to change the privacy settings of anything posted previously.

There is a provision in the case whereby thousands of people can join the case against Instagram and the class lawsuit poses a potential threat to existence. Many users may unsubscribe and close account which would also eventually affect the membership (of Fa: ebook Inc.(NASDAQ:FB) as well.

Facebook Inc. (NASDAQ:FB) spokesperson has commented that the case is baseless and the company will fight back. A favorable outcome of the case for Instagram will deplete the moral confidence among the public . On the contrary an adverse judgment will push it to roll back all amends to the terms of service. It’s a double edged sword. Either way, the company will lose the people’s sentiment for sure.

The shares of the Facebook Inc., (NASDAQ:FB) were up 2.55% to $26.93.

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Published by Donna Fago

I believe in writing content Informing investors with the knowledge they need to invest better today- I have been following the markets for many years and was asked to join the team at recently due to my passion for the markets.