This is dubious at best. He doesn't use it, he's not a lawyer, and his grasp on what they are doing is plain wrong. I'm not saying that privacy concerns are moot. I'm saying Wil Wheaton is your typical self-proclaimed geek these days. He shoots from the hip at anything that might trounce his sense of entitlement.
I feel like most people complaining about the whole 'Instagram will use photos in advertisements' make it seem like the advertisements are going to be on television or newspapers, etc. Or that said advertisements will say "Celebrity X uses IG, you should too".
To me is seems like the ads are going to be more along the lines of promoted restaurants and/or venues using photos the people you follow have taken. IG basically knows where everyone goes based on people voluntarily tagging images, and can now serve ads based on that in the same way FB serves ads from pages you like.
An ad that says, 'Your friend recently went to X (with a photo they took at said venue)', is a pretty engaging advertisement in my mind.
I think I interpreted Wheaton's post in a different way than you did. To me, the author didn't seem to make any bold claims about effects this would have, and he also did not give me the impression that he was an authority on the subject.
To the contrary, I thought the theme of his post was specifically that he didn't know how Instagram's new policies would effect personal privacy, and that lack of understanding concerns him. When pondering the implications, he even goes as far as to ask whether a worrisome, fictional scenario was even a possibility rather than insisting that it would happen.
Where do you think he expressed a sense of entitlement? He's not a user of Instagram, so I didn't get the impression that he thought Instagram owed him something.
I think his whole post is a lead in to an excellent point: in the "social web" in which we all interact daily, we are seeing more and more that you don't have to use a service in any way in order to be affected by the decisions that services make about its own users' privacy. All entitlements aside, it is becoming increasingly difficult to maintain control over your own privacy when the details of your life are extracted not as a result of your own deliberate decisions but by the decisions of others.
Opinions about whether Wil Wheaton is a self entitled geek aside, I hope we can all agree that that is a point worthy of consideration.
So what, in his grasp, was wrong? I'm curious. He says "Instagram is now going to use photos taken by its users in advertising, and they may or may not disclose to viewers when the advertising is happening" -- is that incorrect? That's pretty much the only assertion he makes that could be factually wrong. Everything else in there is his opinion, which isn't "plain wrong"; it's just his opinion, just as it is yours that he's "your typical self-proclaimed geek these days" and "shoots from the hip at anything that might trounce his sense of entitlement."
Entitlement is using a free service and then complaining about the rules. Especially funny considering the rant was written on Google+, which has similar terms of use.
Sure they will, they live and die by users using the service. If enough users decided to start using one of the many competing services instead they will.
In my reading, the plain language of the new ToS states that Instagram can use your photos in advertising without even labeling it as such. IMO this is absolutely at odds with the normal expectations of both people who use social media and people who simply view advertising.
