Facebook (FB) Falls as Instagram Users Plunge 25% on Outrage

December 28, 2012 9:51 AM EST
Shares of Facebook (NASDAQ: FB) are lower early Friday as data showed the company's recent Instagram Terms of Use gaff could have cost the company dearly.

According to data from AppData, nearly a quarter of Instagram's active daily users may have left the service related to the change - which has since been rescinded.

Instagram's active daily users fell from 16.4 million to 12.4 million since the change was first implemented, according to the data. "[We are] pretty sure the decline in Instagram users was due to the terms of service announcement" on Dec. 17, AppData told The New York Post.

Users were outraged as the legal language in the new terms appeared to give Facebook the rights users photos. Facebook said that this wasn't the case, but still backpedaled and restored the old terms. Popular users like Kim Kardashian and Justin Beber, along with thousands of others, voiced their concerns and threatened to leave the service.

Facebook acquired Instagram in April 2012 for $1 billion and Wall Street has been clamoring for the company to monetize the popular asset. Facebook has been making steps to put ads on the service and the terms change was mostly related to those efforts.

Shares of Facebook are down 2.84 percent early Friday to $25.31.

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