Spotify Technology SA (SPOT-US) said on Monday (23rd) that it plans to lay off 6% of its staff and will bear related costs of up to nearly 50 million US dollars; joining the list of large-scale layoffs in the technology industry to prepare for a possible economic recession Prepare.
The tech industry has been on a hiring spree as it faces slumping demand after two years of pandemic-fueled business growth. This resulted in thousands of job cuts ranging from Meta Platforms Inc (META-US) to Microsoft Corporation (MSFT-US).
Spotify CEO Daniel Elk said in a blog post announcing the layoffs of about 600 people, “We have made considerable efforts to control costs over the past few months, but the results have not been good.” Before, investment was too aggressive.” His words echoed views expressed by other tech bosses in recent months.
Spotify’s operating expenses grew at twice the rate of its revenue last year as the voice streaming company aggressively poured money into its podcasting business, which is more attractive to advertisers due to higher engagement.
Meanwhile, companies scaled back ad spending on their platforms, mirroring trends at Meta and Google parent Alphabet Inc (GOOGL-US ), as rapid interest rate hikes and fallout from the Russia-Ukraine war weighed on the economy.
Shares of the company rose more than 3% in premarket trading Monday. The company is currently restructuring to cut costs and adapt to the worsening economic situation.
Dawn Ostroff, the head of content and advertising who has been with the company for more than four years, is leaving, the company said. Ostrov helped shape Spotify’s podcasting business and steered the company through the backlash over Joe Rogan’s alleged spread of coronavirus misinformation on his show.
The company said it would name Alex Norström, head of freemium, and Gustav Söderström, head of research and development, as co-presidents.
As of September 30, Spotify had about 9,800 full-time employees.