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Instagram said to lose millions of daily users -- but did it?

Explanations vary for an AppData report that claims Instagram is losing users by the bucketload. Instagram denies the report.

AppData reported a decline in Instagram traffic.
AppData reported a decline in Instagram traffic.

The number of people using Instagram daily reportedly declined sharply over Christmas, just a week after a flap over the Facebook-owned company's revised terms of service led to widespread user outrage.

As first reported by the New York Post, analytics firm AppData recorded a nearly 25 percent drop in the number of daily active Instagram users in the wake of the controversy. Instagram had 16.4 million daily active users before it announced new plans to introduce advertising into the service; seven days later, that figure had fallen to 12.4 million users by AppData's reckoning.

AppData records only users who log in to Instagram through Facebook. So at best, it records a subset of the users for any given app. At the same time, journalists and tech companies often rely on the company's numbers to get a snapshot of overall trends in app usage.

And AppData, speaking to the Post, said "[We are] pretty sure the decline in Instagram users was due to the terms of service announcement."

Instagram denied the report.

"This data is inaccurate," an Instagram spokesperson told CNET in an e-mail. "We continue to see strong and steady growth in both registered and active users of Instagram."

Other outlets have pushed back on the Post's report as well. The Next Web argued that plenty of other services saw declines over Christmas as well, throwing into question whether any decline was related to the controversy over advertising. But many of those services -- Spotify, Pinterest, the Yahoo Social Bar -- are apps used primarily on the desktop, where Instagram is a mobile app that should seemingly thrive when people are away from their computers. (It did during Thanksgiving.)

Also worth noting is that while daily active users might be on the decline, AppData reports that Instagram's overall user base is still growing. Weekly active users are up 1 million, to 28.5 million; monthly users are up 1.1 million, to 43 million. TechCrunch notes that even daily users appear to be rebounding slightly. Then there's the fact that the alleged decline started several days after the initial controversy, and after Instagram abandoned its plans to make the most controversial changes it had proposed.

But BuzzFeed makes a good case that Instagram did lose users as a result of the controversy, although fewer than the Post's report suggested. Its best piece of evidence: Yahoo's Flickr app, which competes with Instagram, surged during the same time period. Its users are still a small fraction of Instagram's, but many new Flickr users likely defected from its rival.

What does it all mean? Instagram likely did lose users over the revisions to its terms. But the drop may not have been in the millions. The real test will come when Instagram changes its terms of service again. If users don't like the company's plans for inserting advertising into the app, expect to see another decline.