By: BBC World News
Unless users delete their Instagram accounts by a deadline of 16 January, they cannot opt out.
The changes also mean Instagram can share information about its users with Facebook, its parent company, as well as other affiliates and advertisers.
The move riled social media users, with one likening it to a "suicide note".
The new policies follow Facebook's record $1bn (£616m; 758 euro) acquisition of Instagram in April.
Facebook's vice-president of global marketing solutions Carolyn Everson earlier this month had said: "Eventually we'll figure out a way to monetize Instagram."
However, the updated policy will not change how it handles photo ownership or who is able to see a user's pictures, it added.
But the new policy has triggered a backlash among social media users, with some threatening to quit.
One user tweeted: "Good bye #instagram. Your new terms of service are totally stupid and nonsense. Good luck playing with the big boys."
New York-based photographer Clayton Cubbit wrote on his account that the new policy was "Instagram's suicide note".
Analysts said that the new policies could deal a blow to Facebook's reputation and alienate some users.
"Are you concerned how Instagram might be using your photos? Should you receive some compensation if profits are made? Leave your comments and concerns below."
Jude's Korean adventures
Alcohol in South Korea
All bars and local night establishments are filled to the brim with things you have seen in all other places like Jack Daniels and Jagermeister.
However you may spy a little green bottle with Korean writing on it and you may ask what is that? It's called Soju, my friends or 소주 for the Hangil inclined (Korean Language).
Soju is a spirit primarily made from rice, barley, potatoes or tapioca and has an average alcohol content of 20% ABV however there are some brands of Andong Soju that are upward of 45% ABV.
None the less, they will both get the job done. Soju has a taste very similar to vodka but it is slightly sweeter and easier to consume by itself.
Now we get to the matter of cost and availability; however rest assured the answer will be qiute positive. Soju is available all over South Korea from the local convenience store for 1,000 Won = roughly $1 or in a restaurant for 3,000 Won =$3. So these adult treats certainly won't set you back any considerable amount.
It alco mixes quite well with beer, cider, and energy drinks. Soju has been around since the 13th century and shows no signs of going anywhere anytime soon. So when you get the chance come on down to the Republic of South Korea and have a shot of deliciousness.