Jan. 23 (UPI) — Spotify announced plans Monday to slash its headcount by 6% as part of a drive to boost efficiency at the world’s largest music streaming service.
Announcing what he called the ”difficult but necessary” decision in a blog post, CEO Daniel Ek said the challenging economic environment meant the company needed to cut costs, noting that growth in operational spending had been outpacing revenue growth 2-1.
With a workforce of about 10,000, the cuts will mean about 600 people will lose their jobs company-wide. Ek said affected employees would be informed today.
”Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us.
”In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, today, we are reducing our employee base by about 6% across the company. I take full accountability for the moves that got us here today,” Ek wrote.
He said the cuts were part of structural and organizational changes designed to streamline the company and make it more competitive.
The market reacted positively to the news with Spotify shares surging 5% on the New York Stock Exchange, topping $104 early in Monday trading.
Spotify’s announcement is the latest in a series of layoffs by some of the tech sector’s most successful players as inflation and recession worries hit consumer and corporate spending.
Last week, Google and Microsoft announced layoffs totaling 22,000 between them.
The largest job cuts will be at Google, where 12,000 people are being let go.
Google and parent company Alphabet CEO Sundar Pichai blamed the “different economic reality” that exists for tech companies today over the past two years during the COVID-19 pandemic.
Microsoft said it was slashing its workforce by 10,000 in a bid to more closely match its costs to revenue. The software company said it would take a $1.2 billion charge in its fiscal second quarter to cover severance-related costs.
Earlier this month, Amazon said it would shed 18,000 jobs, while Salesforce announced it was cutting headcount by 10,000, representing some 7,000 jobs, citing the economic downturn.
Facebook parent Meta became the first of the tech giants to downsize when it let 11,000 staff go in November.