Instagram Reversal Doesn’t Appease Everyone

Ryan Cox, a 29-year-old management consultant at ExactTarget, an Indianapolis-based interactive marketing software company, said he had already moved his photos to Flickr, Yahoo’s photo-sharing app, where he could have better control.

Mr. Cox said the uproar this week over whether Instagram owned its users’ photos was “a wake-up call.”

“It’s my fault,” he continued. “I’m smart enough to know what Instagram had and what they could do — especially the minute Facebook acquired them — but I was a victim of naïve optimism.”

“Naïve optimism” is as good a term as any for the emotion that people feel as they put their private lives onto social networks.

Companies like Google, Twitter, Yelp and Facebook offer themselves as free services for users to store and share their most intimate pictures, secrets, messages and memories. But to flourish over the long term, they need to seek new ways to market the personal data they accumulate. They must constantly push the envelope, hoping users either do not notice or do not care.

So they sell ads against the content of an e-mail, as Google does, or transform a user’s likes into commercial endorsements, as Facebook does, or sell photographs of your adorable 3-year-old, which is what Instagram was accused of planning this week.

“The reality is that companies have always had to make money,” said Miriam H. Wugmeister, chair of Morrison Foerster’s privacy and data security group.

Even as Instagram was pulling back on its changed terms of service on Thursday night, it made clear it was only regrouping. After all, Facebook, as a publicly held corporation, must answer to Wall Street’s quarterly expectations.

“We are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work,” Kevin Systrom, Instagram’s youthful co-founder, wrote on the company’s blog.

Instagram’s actions angered many users who were already incensed over the company’s decision earlier this month to cut off its integration with Twitter, a Facebook rival, making it harder for its users to share their Instagram photos on Twitter.

Users were apprehensive that the new terms of service meant that data on their favorite things would be shared with Facebook and its advertisers. Users also worried that their photos would become advertising.

Instagram is barely two years old but has 100 million users. Last spring, Facebook announced plans to buy it in a deal that was initially valued at $1 billion. The deal was closed in September for a somewhat smaller amount.

For some users, Mr. Systrom’s apology and declaration that “Instagram has no intention of selling your photos, and we never did” was sufficient.

National Geographic, which suspended its account in the middle of the uproar, held a conference call with members of Facebook’s legal and policy teams. Afterward, the magazine, which has 658,000 Instagram followers, said it would resurrect its account.

Also mollified was Noah Kalina, who took wedding photographs earlier this year for Mark Zuckerberg, the founder of Facebook. In a widely circulated post on Twitter, Mr. Kalina said the new terms of service were “a contract no professional or nonprofessional should ever sign.” His advice: “Walk away.”

On Friday, the photographer said he had walked back. “It’s nice to know they listened.”

Kim Kardashian, the most followed person on Instagram, said on Tuesday that she “really loved” the service — note the past tense — and that the new rules were not “fair.” She had yet to update her 17 million Twitter followers on Friday, but since she is pushing her True Reflection fragrance it is a safe bet that she has forgiven and forgotten.

Disruptions: Disruptions: Instagram Testimony Doesn't Add Up

Eric Piermont/Agence France-Presse — Getty Images Kevin Systrom, Instagram’s chief executive.

On a late August morning, Kevin Systrom, chief executive of Instagram, took an oath before testifying at a hearing of the California Corporations Department, which sought to determine if Facebook’s acquisition of the photo sharing service was in the best interest of Instagram investors. Facebook requested the hearing as a way to speed up the approval of its acquisition.

When asked if his company had received any offers besides Facebook’s at the time of the negotiations, Mr. Systrom said, “No, we never received any offers,” according to transcripts of the hearings. He said Instagram had “talked to other parties, but never received any formal offers from anybody else.”

Ivan V. Griswold, a lawyer for the state regulators, asked again: “Immediately before the negotiations, did you receive any offers from invest — .” Before he could finish his question, the transcripts show, Mr. Systrom cut him off.

“We never received any formal offers or term sheets,” Mr. Systrom said. “No.”

Yet the accounts of several people close to Twitter and Facebook, and documents reviewed by The New York Times, contradict the statements he made under oath. Mr. Systrom and Mike Krieger, the other founder of Instagram, held several meetings as late as March with top Twitter executives, according to people on both sides of the talks, who requested anonymity because the talks were private and because they were concerned about legal repercussions. These people said the sides had verbally agreed weeks earlier on a price for Instagram of $525 million in cash and Twitter shares.

Mr. Systrom told Twitter on March 20 that he and Mr. Krieger had thought about the offer and had decided to “remain independent.” Less than three weeks later, Twitter found out, along with the rest of the world, that Instagram had agreed to be acquired by Facebook in a $1 billion deal negotiated personally by Facebook’s chief executive, Mark Zuckerberg. The deal included $300 million in cash and the rest was in Facebook stock. Instagram was privately owned by its founders, Mr. Systrom and Mr. Krieger, who had a majority stake in the company, and several venture capital funds.

The people familiar with the negotiations said Twitter executives were shocked that they had not been given an opportunity to present a counteroffer. They said Twitter was prepared to make higher offers.

Facebook and Mr. Systrom declined to comment about the statements made to regulators or the talks with Twitter. Gabriel Stricker, a Twitter spokesman, also declined to comment.

Although it might seem unimportant whether wealthy investors made a few million dollars less than they could have, those investors often represent funds that include workers’ pensions and mutual funds. The case could also be seen as another example of a large tech company’s sidestepping regulators.

Statements made by other people involved in the Instagram deal don’t add up, either. When Facebook submitted its applications to California regulators, its general counsel, Ted Ullyot, wrote that although the board had considered possible alternatives, there was a “lack of interest in acquiring the company expressed by other potential acquirers of the company.” Through a spokesman, Facebook declined to comment.

Mark Leyes, director of communications for the Corporations Department, said the department — which is to protect consumers and investors from self-dealing in transactions — had “not received any complaints or protests of our original fairness hearing proceedings in the Facebook/Instagram acquisition.”

In general, said Eric Talley, a law professor at the University of California, Berkeley, “if there is sworn testimony, there are perjury risks.” Also, he added, “there are fraud risks in which an inaccurate statement to your investors could violate antifraud laws at both the state or federal level.”

Dr. Talley said there were many reasons people might try to hide information from investors, including “deal sweeteners,” in which someone might be allowed to remain head of a company or be given more cash.

Mr. Systrom, who previously worked on mergers and acquisitions at Google, was careful about his interactions with Twitter from the start. He asked to meet in restaurants around San Francisco, rather than in either company’s office, according to people briefed on the talks. When he was handed the term sheet by a Twitter employee, a nonbinding document outlining the terms of a proposed acquisition, he read it and then handed it back, asking Twitter executives to hold onto it over the weekend as he weighed the details, those people said.

It is possible investors would have been better off selling in an open auction, to Twitter or even to Google or Microsoft.

The deal with Facebook closed at $735 million in early September, after Facebook’s stock plunged because of investors’ fears that its revenue growth prospects were weak. Given that the privately traded Twitter is expected to make $1 billion in revenue next year, which would increase its valuation considerably, Instagram investors might have made millions of more dollars.

It is unclear why Facebook didn’t mention Twitter’s interest. A clue might be found in the company’s amended S-1 filing with the Securities and Exchange Commission, outlining details of the Instagram acquisition: Dr. Talley said it used language often reserved for antitrust cases.

The wording in the updated S-1 filing, which included a termination fee of 20 percent if the deal fell through, “suggests that there really was some concern about antitrust clearance from the F.T.C.,” Dr. Talley said, referring to the Federal Trade Commission. “These antitrust questions would not have been raised if Instagram was selling to Twitter or Google.”

An F.T.C. spokesman, Mitchell J. Katz, declined to comment.

There also is the issue of what Mr. Systrom and regulators consider a “formal offer.” Although lawyers make differing arguments, Mr. Systrom was asked by regulators on several occasions if he had received other offers, formal or otherwise, and each time he said no.

Facebook has tangled with regulators before. What it does with its customers’ data attracted the attention of the F.T.C., which accused it last year of “unfair and deceptive” practices. The agency’s settlement with the company required Facebook to submit to privacy audits for 20 years.

Facebook has also sparred with the S.E.C. over its depiction of its mobile strategy in its filing to go public.

At the end of the hearing, regulators asked Mr. Systrom a third time about other offers: if there had been “any other inquiries from third parties about a possible acquisition of Instagram” after the Facebook deal was announced. Although Twitter executives had since tried to contact Mr. Systrom, he replied, “I and the board have not received any.”

E-mail: bilton@nytimes.com

Hi Hater: Comedian D.L. Hughley Says He Really Doesn’t Like Black Women Because They Are “Messed Up And Always Angry”

Aren’t his momma, wife and daughters Black?? Oh.

Unfunny funny man D.L. Hughley has never shied away from controversy, offering his tough, unapologetic opinions on race, money, politics and even his family. Hughley joined host Michel Martin on NPR to share his critique of American leaders and to talk about his new book “I Want You to Shut the Fawk Up: How the Audacity of Dopes is Ruining America.”

Via NPR:

MARTIN: OK. But then to go on and in many parts of the book have some very harsh things to say about black women – African-American women.

HUGHLEY: Like what do you think is harsh?

MARTIN: I have to ask, you don’t think that’s a contradiction? Well, this argument that you’re saying that….

HUGHLEY: I don’t – I think my life has been a contradiction.

MARTIN: …black women is – the only black woman you could be married to is your wife.

HUGHLEY: Yes.

MARTIN: …black women are so messed up? I mean what – or because she’s so great?

HUGHLEY: Well, in her ability to kind of tolerate my – it’s her ability to tolerate me, A) and B) I’ve never met an angrier group of people. Like black women are angry just in general. Angry all the time. My assessment, out of, just in my judgment, you either are in charge or they’re in charge, so there’s no kind of day that you get to rest(ph).

MARTIN: Well, I mean I’m thinking you or – one of the ways you came to public attention is your defense of Don Imus for calling the Rutgers women’s basketball team nappy headed ho’s…

HUGHLEY: I can’t, really, that’s like, I can’t disprove or prove a negative, but I can say this: that I have defended any number, I have defended Michael Richards for the N-word. I’ve defended Tracy Morgan for his comments. I defended Rush Limbaugh. You know, to me, you know, what people are talking about has never really kind of worked its way into my mindset. It is the idea that they have the right to say it. So I think that’s really kind of an unfair – optically, that looks different than the way I see things. But…

Stirring up controversy to move a couple of books. Yawn. Isn’t D.L. known for being the unfunniest person on Kings of Comedy? We’re sure a lot of people would love to exchange Bernie back for this jokster.

Do you think D.L. is right? Are all black women angry all the time?

CHRIS BROWN’S EX Rihanna Doesn’t Faze Me I Still Want Chris Back

Chris Brown's recently-dumped ex Karrueche Tran still believes she has a future with the singer — in fact, Karrueche is telling friends, she's not gonna stop trying to get with CB just because Rihanna's back in the picture. 

Sources close to Karrueche tell TMZ, she was hurt when Brown gave her the axe a few weeks ago … but she never stopped loving him — and now, she is on a mission to get him back. 

We're told Karrueche got used to a certain level of celebrity while dating the singer, and she's not ready to "go back to being basic" — even if that means messing around with Brown, while he's messing with RiRi. 

Eventually, we're told Karrueche hopes to edge Rihanna back out of the picture.

Case in point — Karrueche and CB were spotted hanging out together Monday in Burbank, CA … two days after Rihanna and CB were spotted together in L.A. 

As we previously reported, CB broke up with Karrueche earlier this month — citing RiRi as the reason — saying, "I love Karrueche very much but I don't want to see her hurt over my friendship with Rihanna."

Read more: http://www.tmz.com/2012/10/24/chris-brown-rihanna-karrueche-tran-break-up/#ixzz2AE2WwAtE