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With Instagram, another reminder of the big social data lottery ticket

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Today’s uproar about Instagram’s updated terms-of-service is a love story we’ve seen replay again and again: User likes service, user gives service all their data, service then breaks user’s heart by using that data to woo investors or advertisers. Despite all the moaning of betrayals I’ve heard around the newsroom today, it’s not exactly a new tactic.

But while we can debate all we want whether users should be sophisticated enough to realize that if they’re not the customer, they’re the product, certainly start-ups know better. Right?

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I’ve had a couple of opportunities to speak with the founders of Spindle, a mobile app that does a kind of socially-ranked search of what’s going on around you, whether it’s a hot concert or cheap latte. The founders are incredibly smart, open and just genuinely nice-seeming people who have built a company based largely on other social media’s data — which seems ripe for having the rug pulled out from under them.

“A lot of potential investors say, ‘What is your primary dependency?’, and we said we don’t own the data we want to process,” said Simon Yun, a Spindle co-founder and vice president of engineering. He said that Spindle remains relatively safe, however, because it slices data in different ways than Twitter, Facebook, and the other services it relies on do.

In a separate conversation (both were done before the latest Instagram news), Pat Kinsel, the company’s chief executive, echoed Yun’s sentiments.

“Twitter and Facebook aren’t trying to solve the same problem we’re working on,” he told me, while stating that keeping good relationships was “vital” to the company’s success.

So far, he told me, so good.

But while Twitter and Spindle interests are aligned today, the past few years have shown how quickly that alignment can change, and it seems like the only way two social giants ever stay friendly for long is if one acquires the other, making running a social network-dependent network the equivalent of a start-up lottery ticket if they’re looking for an exit.

And even then friendliness isn’t a given: See when Facebook bought FriendFeed, or Foursquare’s predecessor, Dodgeball, was swallowed by the Googleplex. Both were shutdown, with the latter’s founder publicly sharing his disgruntledness.

Kinsel is relatively sanguine about these shifting alliances, posting about it on his Facebook wall.

“WRT Instagram and FB sharing data,” he wrote. “Umm, they’re the same company. Furthermore, if you spend (nearly) a billion dollars on something, you can do what you want.”

We caught up again this afternoon, and he remained confident in Spindle’s own prospects as well.

“We would love to be an independent company long term,” he said.

The key difference between his company and others who fell by the wayside, he said, is that others were features; Spindle, while appearing to be a handy phone app, is really about the advanced algorithms and analytics that power that app.

“We’re a technology company trying to solve very hard search problems,” he said. “[Twitter and Facebook] might be able ot cobble something together, but they’ll see it’s a really hard problem and our results are better then theirs.”

How do you feel about start-ups tapping into third-party data for their core services? Is it a way to jumpstart your business, or a dangerous dependency — or a bit of both? Let me know what you think via email or on Twitter at @HiveBoston and @Morisy.

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