The Terms of Service faux pas Instagram made last month doesn't appear to have permanently damaged its upward membership trajectory. The company has posted that it now has 90 million monthly active users, a 10% increase from the previous month.

In late December, the company’s new Privacy Policy and Terms of Service provoked the kind of furious backlash by its members that more commonly accompanies privacy-related actions by its new parent, Facebook -- Facebook bought Instagram for a reported US$ 1 billion in cash and stock last spring.

The Controversy

The Privacy Policy and Terms had been modified to include sections that gave Instagram the right to use “your username, likeness, photos (along with associated metadata) and/or actions you take, in connection with paid or sponsored content or promotion, without any compensation to you.” It also said that “paid services, sponsored content or commercial communications” would not always be labeled, which some users thought undermined the credibility of postings on the site.

Within days of posting the new corporate documents, Instagram responded. Co-Founder Kevin Systrom wrote on the corporate blog that the company was reverting to its original language for those sections. He emphatically stated that the site “has no intention of selling your photos, and we never did,” and added that users own their photos.

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After the controversy hit, there was a report in the New York Post that Instagram’s active user base dropped by 25% in one week because of the privacy/ownership controversy. It was based on data from research firm AppData, which utilized stats of Facebook’s applications employed by Instagram’s users.

Post/AppData Report

At the time, Instagram denied that there was any drop off, telling news media that there was still “strong and steady growth” among registered and active users. The Post’s report was cited by observers as a key cause for a 2.9% drop in Facebook’s stock about the same time.

The newly posted active usership indicates that the Post/AppData report was way off in total numbers, as it showed the drop going from 16.4 million active users to 12.4 million. Given the huge discrepancy in total active users, and the fact that not all users connect their accounts on Facebook and Instagram, the report’s accuracy in depicting a 25% drop is also now called into question.

In late December, AppData issued a statement essentially retracting the idea that any drop was related to the privacy/ownership fracas. It said that the drop seemed “likely related” to the Christmas holiday, especially since similar drops were shown at Skype, Pandora, Pinterest and Yelp.