New York: The founders of Instagram are leaving Facebook Inc. after growing tensions with chief executive officer Mark Zuckerberg over the direction of the photo-sharing app, people familiar with the matter said. The stock dropped 2 per cent in pre-market trading Tuesday.
Shares of Facebook Inc fell more than 2 per cent in early trading on Tuesday after the two founders of photo-sharing app left the social networking giant under unexplained circumstances.
Kevin Systrom and Mike Krieger, who have been at the company since Instagram’s acquisition by Facebook in 2012, had been able to keep the brand and product independent while relying on Facebook’s infrastructure and resources to grow. Lately, they were frustrated with an uptick in day-to-day involvement by Zuckerberg, who has become more reliant on Instagram in planning for Facebook’s future, said the people, who asked not to be identified sharing internal details.
Without the founders around, Instagram is likely to become more tightly integrated with Facebook, making it more of a product division within the larger company than an independent operation, the people said.
For years, Systrom and Krieger were able to amicably resist certain Facebook product initiatives that they felt went against their vision, while leaning on Facebook for resources, infrastructure and engineering talent. A new leader may not be able to keep the same balance, or may be more willing to make changes that help the overall company at the expense of some of Instagram’s unique qualities.
The New York Times earlier reported Systrom and Krieger’s departure. The founders confirmed their decision in a blog post, although Facebook didn’t have a comment on the tension.
“Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents,” Zuckerberg said in a statement. “I’ve learnt a lot working with them for the past six years and have really enjoyed it.”
Krieger and Systrom built Instagram and sold it to Facebook for $715 million six years ago. When the deal was announced, the company had only 13 employees and 30 million registered users. Now more than 1 billion people use the app monthly, and it is the main source of advertising revenue for Facebook outside the social network’s main news feed. A Bloomberg Intelligence analysis in June said Instagram is worth more than $100 billion.
“We’re planning on taking some time off to explore our curiosity and creativity again,” Systrom said in a statement on the Instagram blog. “Building new things requires that we step back, understand what inspires us and match that with what the world needs; that’s what we plan to do.”
While Facebook has weathered scandals on privacy, fake news and election interference, Instagram’s brand has remained mostly untarnished, and continued to quickly add users. With more than 2.2 billion users, Facebook is running out of people in the world to sign up for its social network, and can only push so many advertisements into its news feed. That means it has become increasingly dependent on the standalone photo-sharing app for its future.
Instagram attracts a younger cohort of users who are critical to Facebook’s growth. Facebook users also have been flocking to Instagram as an escape, tired of the political bickering and privacy scandals that plague the parent company. Users averaged 53 minutes a day on Instagram in June, just five minutes less than on Facebook, according to Android data from analytics company SimilarWeb.
Instagram is on track to provide Facebook with $20 billion in revenue by 2020, about a quarter of Facebook’s total, Ken Sena, an analyst at Wells Fargo Securities, wrote to investors earlier this year.
— Bloomberg
