Exploiting the audience
Google and Facebook are two of the four US technology giants – Apple and Amazon being the others – that dominate the consumer internet. All want to realise the full commercial potential of their products. And they have employed a variety of business models to do so. Google uses its free search engine facility to maximise revenue by attracting advertising. Facebook, via its social networking site that millions access, is, however, struggling to match Google’s success.
All four companies have faced legal and regulatory challenges to their activities, and frequent claims that they abuse their dominant market position. In the latest row Instagram, a company that Facebook owns, operates a free photo-sharing social app that has 100 million users. Instagram has, unexpectedly, changed its operating rules to favour itself at the expense of its customers, and their legal rights. From January, under new terms and conditions that Instagram proposes, it can sell to third parties and for profit the photos that users have posted to the social app. And it can do so without either seeking the owners’ approval, paying them for their photos or even telling them of the sale. Following an internet storm of disapproval the company distanced itself from suggestions it was exploiting photos in some forms of advertising.
Free social networks, like Instagram, can, if successful, initially attract a huge user base. The challenge they face is how to set up a revenue model for their service that will turn millions of users into cash-paying customers. Instagram’s crude efforts to do so, by changing terms and conditions of the service they offer, after they have established it, is unacceptable.
In doing so, the company, it would appear, is infringing privacy rights of users and breaching their copyright, by failing to secure their consent to sell their photos, or to inform them they have done so. What Instagram is now attempting will increase public concern and again raise questions about how social media sites use personal material for profit.