Called Hyp3r, the startup scraped public data such as users' physical locations, profile information and photos to serve better targeted ads. Information collected by Hyp3r also includes data stored in Instagram Stories that is content designed to disappear after 24 hours.
On detecting foul play, Instagram sent a cease-and-desist letter to Hyp3r, CNet reported on Wednesday.
"Hyp3r's actions were not sanctioned and violate our policies, as a result, we've removed them from our platform," the report quoted an Instagram spokesperson as saying.
A portion of what Hyp3r is scraping comes from Instagram's Location pages which highlight images from public accounts that have been geo-tagged and are visible publicly anyway.
Facebook has been under scrutiny since the revelation last year that consultancy firm Cambridge Analytica had misused Facebook users data in the run-up to the 2016 US presidential election.
On Tuesday, identifying a case of fraud, social networking giant Facebook sued two app developers for click injection scam that infected smartphones with malware.
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