ALT Analytica Limited

By Deepa Seetharaman 

The two co-founders of Facebook Inc.'s popular Instagram app are stepping down, a move marking continued tumult at the social-networking giant.

The co-founders -- Kevin Systrom, Instagram's chief executive, and Mike Krieger, chief technology officer -- clashed with Facebook executives over the extent of Instagram's autonomy in recent months, according to people familiar with the matter. Earlier this year, Chief Executive Mark Zuckerberg shifted a senior Facebook executive, Adam Mosseri, over to Instagram in anticipation that the founders might leave, one of the people said.

Among other things, Facebook officials, including Mr. Zuckerberg, clashed with the co-founders over growth tactics and how to more rapidly expand the photo-sharing app's user base, another person said. Senior Facebook officials had known the two men were frustrated working within a large company and had begun making preparations for them to leave, another person familiar with the matter said.

"We're planning on taking some time off to explore our curiosity and creativity again," Messrs. Systrom and Krieger said in a joint statement. "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."

Messrs. Systrom and Krieger founded Instagram in 2010 and sold the photo-sharing app to Facebook in 2012 for about $1 billion. It has become a bright spot within Facebook as the company for the first time deals with slowing growth.

"Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents," Mr. Zuckerberg said in a statement. "I've learned a lot working with them for the past six years and have really enjoyed it. I wish them all the best and I'm looking forward to seeing what they build next."

Current and former employees expressed surprise late on Monday about the moves, earlier reported by the New York Times but which hadn't been announced widely within the company yet. The two men were seen as key defenders of Instagram's culture within Facebook and widely respected among Instagram employees.

The departure represents the second major exit by the founders of an acquisition that had become central to Facebook's growth. WhatsApp co-founders Jan Koum and Brian Acton left after a series of disagreements over how to wring more money from the messaging service, which Facebook bought for $22 billion in 2014.

The disagreements at Instagram were similar, said a person familiar with the matter, saying the relationship between the co-founders and Facebook officials had been "tense" in recent months. One distinction is that the WhatsApp disputes centered on the debate over whether to allow ads within the messaging service, which the co-founders had long opposed, whereas Instagram embraced ads early on.

Some of the tension began this year, according to people familiar with the dynamic, as Facebook and Instagram executives began to clash over the extent to which Instagram could chart its own direction within Facebook's orbit. Some Facebook teams began exerting more control over their Instagram counterparts, one of the people said.

Facebook's Instagram purchase was a relative bargain compared with WhatsApp. After Messrs. Systrom and Krieger reaped a massive payday despite the company having no revenue and only about a dozen employees, it quickly became a go-to app for young people, many of whom had slowed their use of Facebook.

This year Instagram topped more than 1 billion monthly active users, after adding hundreds of millions of users in roughly the past 18 months.

Instagram had become a key cog in the Facebook empire as the social-networking giant enjoyed seemingly unstoppable growth and a stock price that climbed steadily upward. Those trends reversed in July, when the company sent tremors through the stock market by warning that its growth was slowing, an announcement that chopped almost $120 billion from the firm's market value.

The news in some ways heightened Instagram's importance within the company, as its popularity among younger users is seen as more stable than at Facebook's main platform. Instagram has also largely stayed out of the negative glare of Facebook's privacy issues, which intensified earlier this year on the revelation that political firm Cambridge Analytica had accessed the personal data on tens of millions of users without their knowledge.

Among the many efforts to turbocharge Instagram's popularity, the company in June launched a new hub for long-form video, called IGTV, which was Facebook's latest attempt to tap into growing demand among consumers and advertisers for mobile video.

Marne Levine, Instagram's chief operating officer who helped develop the app into a full-fledged business, was moved back to Facebook this month to become head of global partnerships. It isn't decided who will take over leadership at Instagram, according to a person familiar with the matter.

Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

September 25, 2018 00:50 ET (04:50 GMT)

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