The new policies are part of Facebook's $1 billion (£616 million) acquisition of Instagram, and allow for the two companies to more easily share information and data.
Instagram said in a blog post that nothing has changed in terms of photo ownership, or who can view them.
The changes do, however, help Instagram "function more easily as part of Facebook by being able to share info between the two groups," the post said.
"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," the company added.
According to the new policy, the site can now share user content and information — cookies, log files, location data, usage data — with affiliates (like Facebook), which may in turn use those details to improve their own services.
"But these Affiliates will honor the choices you make about who can see your photos," Instagram wrote.
The Instagram-Facebook data merge follows a recent vote conducted on Facebook, which asked users to approve the move. It also asked users if they wanted to do away with the system that allowed them to vote, and replaced the "Who can send you Facebook messages?" section of its privacy controls with "new filters for managing incoming messages."
In the end, it was decided that a vote on Facebook was only binding if more than 30 per cent of all active registered users voted; since that did not happen, the changes were approved, despite some criticism.