Instagram has just announced that it'll be reverting back to the original Terms of Service that has been in place since 2010. Which basically means they've abandoned the whole mess they created because they saw how pissed off everyone was. Good thing!
Here's a bit of what Kevin Systrom, co-founder of Instagram, had to say:
Because of the feedback we have heard from you, we are reverting this advertising section to the original version that has been in effect since we launched the service in October 2010. You can see the updated terms here.
Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, 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.
You also had deep concerns about whether under our new terms, Instagram had any plans to sell your content. I want to be really clear: Instagram has no intention of selling your photos, and we never did. We don't own your photos — you do.