Instagram, which was acquired by Facebook in September, just posted an interesting update on its blog confirming plans to share data on users with Facebook, the #1 social network that claims nearly one billion users worldwide. Instagram’s updated Terms of Service and Privacy Policy will go into effect starting January 16 to enable deeper integration between the two service, making it easier to “fight spam more effectively, detect system and reliability problems more quickly and build better features” for everyone by understanding how Instagram is used.

Under the new terms, Instagram can also share User Content and your information with businesses that are “legally part of the same group of companies that Instagram is part of”. In other words, Facebook now has access to Instagram user data. The social networking behemoth is allowed to use this information to “help provide, understand and improve” both its own and Instagram’s service…

There is no need to panic because  Facebook “will honor the choices you make about who can see your photos”, per the new Terms of Service and Privacy Policy.

According to Instagram’s blog post:

Our updated privacy policy helps Instagram function more easily as part of Facebook by being able to share info between the two groups. This means we can do things like fight spam more effectively, detect system and reliability problems more quickly, and build better features for everyone by understanding how Instagram is used.

TechCrunch points us to the “Information Storage” section explaining Instagram can transfer the data it collects on you, “including personal information across borders and from your country or jurisdiction to other countries or jurisdictions around the world”.

It was confirmed last week that Facebook and Instagram profiles will merge into one.

Unified profiles should include people’s personal data from Facebook and from Instagram. Facebook’s VP of global marketing solutions Carolyn Everson also confirmed that “monetization” will be coming to Instagram so you better brace yourself for some ads.

Just recently, Instagram brought us Facebook-like web profiles and previously rolled out automatic translation of Instagram @mentions to correct Twitter usernames in tweets. However, as Twitter steps onto Intsagram’s toes with photo filters, the two services have been at odds lately.

Instagram even pulled support for Twitter’s feature that renders Instagram URLs  so tweeting links to Instagram photos no longer makes it possible to view images in-line on Twitter.

Are you worried about the new Instagram-Facebook data sharing policy?