Market Overview

Instagram Co-Founders Leave Facebook

Instagram Co-Founders Leave Facebook

Social media giant Facebook, Inc. (NASDAQ: FB) promised Instagram co-founders autonomy as part of the 2012 acquisition -- a pledge that reportedly wasn't kept which led to their resignation.

What Happened

Instagram co-founders Kevin Systrom and Mike Krieger resigned Monday and didn't offer a reason to the parent company.

Sources close to the matter told TechCrunch the departure is due to rising tension between Facebook and Instagram's leaders likely the result of a management shuffle in May. Specifically, Instagram's former VP of Product Kevin Weil moved to work with Facebook's blockchain technology and was replaced with the Adam Mosseri, who was VP of Facebook News Feed and part of Facebook CEO Mark Zuckerberg's "inner circle."

Systrom and Zuckerberg reportedly clashed multiple times a year although they still got along and were able to resolve disputes. The two executives had different opinions on what content is shared between the two different platforms although more recently the tension became more heated and resulted in Zuckerberg pulling all of the links to Instagram from Facebook.

Why It's Important

As part of the "old-school in-crowd of Facebook," Mosseri may have exerted pressure for Instagram to do more for Facebook to counter declining teen usage on the core Facebook platform, a source told TechCrunch. However, another source offered a different view and told TechCrunch Mosseri was a productive member of the Instagram team and well-received.

What's Next

Another source told TechCrunch Mosseri was disappointed he wasn't promoted to a high ranking post within the Facebook side of the business and his move to Instagram was "kind of a consolation prize." On the other hand, his move to Instagram could also be Zuckerberg doing "succession planning for Kevin and Mike" to lead the picture and video sharing platform moving forward.

In the meantime, investors may be showing signs of concerns with the stock trading lower by more than 2 percent to $161.85 early Tuesday morning.

Related Links:

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BTIG Raises Facebook Price Target By More Than 50%, Says Instagram Becoming 'Most Powerful, Valuable Mall In The World'


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