Why I'm Quitting Instagram

I don't mean to levy an accusation here. It's just worth pointing out that using subscriber/visitor data as a profit center isn't uncommon. If you didn't engage in that practice, then I'll take you at your word. I'm sorry that my original language was accusatory. I didn't intend it that way.

In an attempt to get off on the right foot, I do not think that you have, or ever had, the same product as Facebook. Facebook's product is a straight social media business. However, if advertising was your primary source of income, you were in the same business: selling advertising. I will also grant that because of their product model, there is an implicit level of trust that is easily violated. This implicit trust is not as big of an issue for content companies, because the reader isn't trusting you with the gory details of their life on a day-to-day basis.

I learned enough in my time as a direct marketer to know that advertisers don't buy advertising on impulse. They buy it based on some criteria. That criteria can be really simple, like vertical alignment, or it can be more subtle. Vertical alignment is simple: E.g., I'm selling phones, so I want to advertise on a gadget website. Easy, but you can't build a business on easy alone.

A more subtle case is when an advertiser wants to target a demographic. Anyone with advertising inventory must go through some effort to identify who their inventory is comprised of. You're selling views, but views by whom? That is the question that advertisers must answer before they can buy, except in simplistic cases mentioned above.

This means that anyone in the business of advertising must have some means of identifying their readership. This is the same kind of private information that people fear Facebook is building and leveraging. The more targeted this information, the higher the premium one can charge to advertisers. The difference is that Facebook's product is a funnel for the information that drives their business.

As usual, matters are not black & white, but business like the ones you founded are on the same spectrum as companies like Facebook. I know that can be hard to see from the inside. You're looking around you, and you're feeling out the context. You're probably thinking, there's no way my business is in any way similar to what Facebook is doing. From a product perspective, I'd agree, but from a business perspective, it's not all that dissimilar.

EDIT: My post didn't even touch on the topic of list sharing and marketing "partners", because I don't want to be accusatory. I have no idea if you ever engaged in those practices, and they're becoming less common, so I'll give you the benefit of the doubt.

They collect and market user information in an almost identical way to Facebook.

(in aggregate via statistical models + advertising to identified segments)

You may feel there is some kind of moral difference between the two, but in terms of information gathered and analyzed, there really is not.