According to a recent report, Instagram lost nearly 25% of its users (as tracked by AppData) nearly overnight. The cause is believed to be due to a very unpopular change to its Terms of Service. Prior to this, Instagram was one of the most popular and fastest growing social media sites.
Many companies overlook the importance of terms of service. They are, and always have been, critically important from a legal perspective. But so too are they important from a customer relations perspective as the Instagram incident illustrates. Many companies (and their lawyers) bank on the fact that most users do not read the terms of service. The problem with this approach is that some users DO read them. And more frequently, consumer watchdog groups do as well.
When someone flags a problem or change as occurred here, then the issue goes viral in a hurry. Ironically, the same advantages of the virality of social media that helped Instagram with its meteoric growth, were disadvantages when this news broke and apparently lead to an immediate 25% decline in users.