Funny how it works...
These companies decide to show their true colors and let their users know they're shit and that their privacy / rights is worth less than an advertising dollar. They all of a sudden decide that they're above all that is holy and start granting themselves rights to your copyrighted material, and its perfectly ok, because its written in the T&C's...
Adobe tried this same shit not too long ago* with their T&C's for Photoshop express, giving themselves complete and irrevocable control over your content...
http://www.theregister.co.uk/2008/03/28/adobe_photo_pimping/
The end result for Adobe was the same as well. Revise the T&C's and tell the public "you misunderstood our intentions, we never intended to use your content for any ill mannered purpose, we love our customers, we wouldnt do that."
Bullshit... The only thing that was misunderstood was Instagram thinking they could slide this past the public unnoticed, because nobody reads the T&C's anyway, right? or that the general public is too stupid to realize what they're agreeing to.
These T&C's are written and reviewed by lawyers, very carefully, a misunderstanding, my ass! It states their intentions right in the T&C;s. To say it was a misunderstanding is a bigger insult to its users than the fact that they tried to pull this crap in the first place. The CEO should save face and just be honest and say: whoops busted, my bad! sorry, wont try that again...
Instagram's Updated T&C's:
"Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you."
"Instagram does not claim ownership of any Content that you post on or through the Service. Instead, you hereby grant to Instagram a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service."
Adobe's Photoshop Express T&C's from their attempt to pull this shit:
Adobe does not claim ownership of Your Content. However, with respect to Your Content that you submit or make available for inclusion on publicly accessible areas of the Services, you grant Adobe a worldwide, royalty-free, nonexclusive, perpetual, irrevocable, and fully sublicensable license to use, distribute, derive revenue or other remuneration from, reproduce, modify, adapt, publish, translate, publicly perform and publicly display such Content (in whole or in part) and to incorporate such Content into other Materials or works in any format or medium now known or later developed.
Adobe tries to go a little farther than Instagram did, but the general spirit is still the same.
*Apparently, my perception of time is badly skewed and "not so long ago" turns out to be 5 years ago...