Instagram co-founders resign in latest Facebook shake-up

Marcus Newton
September 26, 2018

Instagram founders Kevin Systrom and Mike Krieger have resigned from their leadership roles and are leaving Facebook.

They founded the photo-sharing app in 2010 and sold it to Facebook in 2012 for about $1 billion.

Facebook acquired Instagram in 2012 for $1 billion, when user numbers for the app were around 30 million.

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.

Bloomberg noted that Instagram has featured more prominently in Facebook's earnings calls, with Zuckerberg saying it is grown twice as fast as it would have without the parent company.

As a result of the incident, the United Kingdom government fined Facebook £500,000 (C$871,325). They clearly want to build something new, but it "requires that we step back".

Kevin Systrom has also had multiple clashes with Facebook's CEO Mark Zuckerberg multiple times over the year, particularly related to sharing data back with Facebook.

Instagram co-founders Kevin Systrom, Mike Krieger reportedly step down

The reported resignations come amid heightened criticism that social media platforms aren't doing enough to police their content after USA intelligence agencies determined that the Russian government had used these platforms to disseminate false news and advertisements in an attempt to influence U.S. elections in 2016.

"We believe their departure comes as a surprise given Instagram's success and its growing importance within Facebook", said Doug Anmuth in a JP Morgan note to clients on Tuesday. That changed. But so did the number of users - now more than a billion. People still loved it, to a degree that they haven't loved Facebook for years now, if they ever did.

Systrom and Krieger's resignations come less than six months after the founder of another key Facebook business announced he was leaving.

"We're planning on taking some time off to explore our curiosity and creativity again", Systrom said in a statement. Concerns over Facebook's business sparked the biggest one-day wipeout in USA stock market history in July.

Instagram is one of Facebook's most important properties and recently hit a reported one billion users.

But it may be that it was Facebook's acquisition of the app that ultimately led to the cofounders of Instagram stepping down.

But slowly, in recent years, the Instagram app started putting on that weight. Apple and Amazon are two of the most heavily weighted stocks in the U.S. market. Instagram is adding 300 million active users each month, whereas Facebook is adding 228 million to its main service. Breakingviews has previously calculated that Instagram could be worth more than $80 billion as a standalone company.

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Other reports by MaliBehiribAe

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