Facebook Inc. (FB - Get Report) shares fell Tuesday after the social media group confirmed the departure of the co-founders of its popular Instagram app, a move that marks the second major exodus of key developers in its fast-growing messaging businesses.
Instagram CEO Kevin Systrom and chief technical officer Mike Krieger, who founded and launched the photo-sharing app eight years ago, said late Monday that they were leaving Facebook, which purchased Instagram for $1 billion in 2012, in order to "explore our curiosity and creativity again." Systrom wrote in a blog post that "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." Multiple media reports, however, put the departure down to increasing tensions between the pair and CEO Mark Zuckerberg, who has grow increasingly reliant on Instagram to drive group profits.
"Kevin and Mike are extraordinary product leaders and Instagram reflects their combined creative talents," 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."
Over 8 years ago, Kevin and I started Instagram, hoping to build something that would bring out people's creativity and spirit for exploration. Now it's time for the next chapter. A huge thank you to everyone in the community who we've met along the way. https://t.co/9Omyj6VHbe— Mike Krieger (@mikeyk) September 25, 2018
Action Alerts Plus holding Facebook fell 1.2% in the opening 45 minutes of trading to change hands at $163.48 each, a move that extends its year-to-date decline to around 7.5% and values the Palo Alto, Calif.-based group at just under $478 billion.
Zuckerberg himself touted the value of Instagram and WhatsApp to the group's bottom line and growth prospects, saying that at least 2.5 billion people use at least one of its four messaging platforms each month and that Instagram hit a "milestone with now more than 1 billion actives".
"This is a moment to reflect on how this acquisition has been an amazing success. When Instagram joined us the team had only 16 people. And since then, Kevin and the team have built Stories, Direct, and now IGTV. This has been a story of great innovation and product execution. And it's also a story of how effective the integration has been," Zuckerberg told investors on a conference call.
"We believe Instagram has been able to use Facebook's infrastructure to grow more than twice as quickly as it would have on its own. So a big congratulations to the Instagram team and to all the teams across our company that have contributed to this success," he added.
Mobile ad revenue, which accounts for more than 90% of Facebook's overall sales, rose 50% in the second quarter (compared to last year) to $11.9 billion, "driven primarily by ads in feed on Instagram and Facebook", according to CFO David Wehner.
The exit of Systrom and Krieger is the second major executive departure for Facebook in the past six months and follows the resignation of WhatsApp co-founder and CEO Jan Koum, who announced his decision to quit in April amid reports that he and co-founder Brian Acton clashed with Zuckerberg over Facebook's desire to use the personal data of WhatsApp's 1.5 million daily active users to form target ads that would increase group revenue.