Tech industry layoffs due to pandemic-driven demand downturn; Spotify to cut 6% of workforce, take $50M charge.
Spotify Technology SA announced on Monday that it would be cutting 6% of its workforce and taking a related charge of up to nearly $50 million due to the current demand downturn in the tech industry. This is in line with other tech firms like Meta Platforms Inc and Microsoft Corp which have also made significant job cuts in recent months.
Spotify’s Chief Executive Daniel Elk explained that the company had invested heavily in its podcast business over the past few months, but this had not been enough to offset the impact of the economic downturn. This was also echoed by other tech bosses, with businesses pulling back on ad spending on the platform.
In response to the economic situation, Spotify is restructuring itself to cut costs and adjust to the deteriorating economic picture. Dawn Ostroff, the head of content and advertising, is leaving after an over four-year stint at the company. Alex Norström, head of the freemium business, and research and development boss Gustav Söderström have been appointed as co-presidents.
The company had about 9,800 full-time employees as of Sept. 30, and the job cuts will affect around 600 employees. Despite the job cuts, Spotify’s shares rose 5.8% to $103.55.
The tech industry is facing a difficult time due to the pandemic-driven growth of the past two years, which had led to an aggressive hiring spree. Companies are now having to make job cuts and adjust their expenditure in order to survive the possible recession. Spotify is no exception, and has taken the difficult decision to cut 6% of its workforce in order to remain competitive.
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