Spotify Lays Off 400 Employees, Tech Giant's Layoff Storm Still Continues!

JAKARTA - After Microsoft and Google, now is Spotify's turn to announce Termination of Employment (PHK) for the second time, due to the economic downturn being felt throughout the technology industry.

The company plans to cut 6 percent of its employees, which amounts to about 400 of its 6.600 employees overall.

Spotify CEO Daniel Ek announced the restructuring in a message to employees which was also posted online. He gave reasons, the layoffs were part of a reshuffle involving management.

"In order to better match our costs, we have made the difficult but necessary decision to reduce our headcount," Ek said in the announcement.

Spotify benefits from the COVID-19 lockdown policies as more people seek entertainment while they are stuck at home.

Ek pointed out where the company's business model, which has long focused on growth, needed to quickly evolve. The company's operating expenses last year doubled compared to its revenue.

“As you know, over the last few months we have made a lot of efforts to control costs, but it wasn't enough,” said Ek.

"So while it's clear this path is the right path for Spotify, it doesn't make it any easier, especially as we consider the many contributions these partners have made."

The terminated employee will receive approximately five months of severance pay, paid leave, and health insurance during the severance period.

Spotify also made layoffs in October 2022, where they laid off 38 employees from podcast studios Gimlet Media and Parcast.

Spotify missed its earnings per share target in the second and third quarters of this fiscal year, although it barely beat earnings estimates as it saw growth in the number of paying subscribers.

In October, the streaming service reported having 456 million monthly active users for the third quarter, a 20 percent year-over-year increase. Spotify also counted 195 million paying subscribers, up 13 percent from the same period last year.

For your information, the hurricane of layoffs didn't just hit Spotify either. Just last week, Google parent Alphabet announced it was cutting 12.000 jobs, while Microsoft also laid off 10.000.

Likewise with Amazon, which began notifying its employees, where they would reduce the number of employees by 18.000 workers. This was quoted from various sources, Tuesday, January 24.