Spotify announced Monday it’s cutting 6% of its global workforce as the music streaming company contends with a gloomy economic environment that has seen consumers and advertisers alike limit their spending.
Spotify has a total workforce of around 9,800 people, which means the cuts impact about 600 employees. According to its LinkedIn profile, the company employs 5,400 people in the U.S. and 1,900 in Sweden.
Spotify, which is based in Sweden but listed on the New York Stock Exchange, sent an internal memo to staff Monday announcing the layoffs.
One-on-one conversations with affected employees will begin over the next several hours, Daniel Ek, Spotify’s CEO, wrote in the note, which was posted publicly on the company’s website.
“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,” Ek said.
“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.”
Ek said in the note to employees that he takes “full accountability for the moves that got us here today.”
Laid-off employees will receive an average of five months of severance and continued health-care coverage, Ek said. Immigration support will also be available for workers whose immigration status is connected with their employment.
Dawn Ostroff, Spotify’s head of content, is also leaving the firm. Ostroff, a former president of Conde Nast Entertainment, joined Spotify in 2018 to help the company grow its fledgling advertising and podcasting businesses.
In her time at Spotify, Ostroff signed Barack and Michelle Obama’s production company Higher Ground Productions to have the former U.S. president and first lady work on exclusive podcasts for Spotify. She also led the deal to get exclusive rights to the Joe Rogan show and was responsible for negotiating exclusive podcasting deals with Kim Kardashian, Prince Harry and Meghan Markle.
“Because of her efforts, Spotify grew our podcast content by 40x, drove significant innovation in the medium and became the leading music and podcast service in many markets,” Ek said in the memo Monday.
On Friday, Google became the latest major tech name to announce layoffs, saying it plans to cut 12,000 employees. Microsoft and Amazon, meanwhile, have also announced layoffs.
Tech firms faced a reckoning in 2022 as interest rate hikes from the U.S. Federal Reserve made shares a less attractive bet for investors.
Here’s the full memo Ek sent to Spotify staff:
Team,
As we say in our Band Manifesto, change is the only constant. For this reason, I continue to reiterate that speed is the most defensible strategy a business can have. But speed alone is not enough. We must also operate with efficiency. It’s these two things together that will fuel our long-term success. With this in mind, I have some important news to share today.
While we have made great progress in improving speed in the last few years, we haven’t focused as much on improving efficiency. We still spend far too much time syncing on slightly different strategies, which slows us down. And in a challenging economic environment, efficiency takes on greater importance. So, in an effort to drive more efficiency, control costs, and speed up decision-making, I have decided to restructure our organization.
To start, we are fundamentally changing how we operate at the top. To do this, I will be centralizing the majority of our engineering and product work under Gustav as Chief Product Officer and the business areas under Alex as Chief Business Officer. I’m happy to say that Gustav and Alex, who have been with Spotify for a long time and have done great work, will be leading these teams as co-presidents, effectively helping me run the company day-to-day. They’ll tell you more about what this means in the coming days, but I’m confident that with their leadership, we’ll be able to achieve great things for Spotify.
Personally, these changes will allow me to get back to the part where I do my best work—spending more time working on the future of Spotify—and I can’t wait to share more about all the things we have coming.
As a part of this change, Dawn Ostroff has decided to depart Spotify. Dawn has made a tremendous mark not only on Spotify, but on the audio industry overall. Because of her efforts, Spotify grew our podcast content by 40x, drove significant innovation in the medium and became the leading music and podcast service in many markets. These investments in audio offered new opportunities for music and podcast creators and also drove new interest in the potential of Spotify’s audio advertising. Thanks to her work, Spotify was able to innovate on the ads format itself and more than double the revenue of our advertising business to €1.5 billion. We are enormously grateful for the pivotal role she has played and wish her much success. In the near term, Dawn will assume the role of senior advisor to help facilitate this transition. Alex will take on the responsibility for the content, advertising and licensing work going forward and you’ll hear more from him on that.
The need to become more efficient That brings me to the second update. As part of this effort, and to bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees.
Over the next several hours, one-on-one conversations will take place with all impacted employees. And while I believe this decision is right for Spotify, I understand that with our historic focus on growth, many of you will view this as a shift in our culture. But as we evolve and grow as a business, so must our way of working while still staying true to our core values.
To offer some perspective on why we are making this decision, in 2022, the growth of Spotify’s OPEX outpaced our revenue growth by 2X. That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap. As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough. So while it is clear this path is the right one for Spotify, it doesn’t make it any easier—especially as we think about the many contributions these colleagues have made.
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.
My focus now is on ensuring that every employee is treated fairly as they depart. While Katarina will provide more detail on all of the specifics around the ways we are committed to supporting these talented bandmates, the following will apply to all impacted employees:
Severance pay: We will start with a baseline for all employees with the average employee receiving approximately 5 months of severance. This will be calculated based on local notice period requirements and employee tenure.
PTO: All accrued and unused vacation will be paid out to any departing employee.
Healthcare: We will continue to cover healthcare for employees during their severance period.
Immigration support: For employees whose immigration status is connected with their employment, HRBPs are working with each impacted individual in concert with our mobility team.
Career Support: All employees will be eligible for outplacement services for 2 months.
What’s Next
In almost all respects, we accomplished what we set out to do in 2022 and our overall business continues to perform nicely. But 2023 marks a new chapter. It’s my belief that because of these tough decisions, we will be better positioned for the future. We have ambitious goals and nothing has changed in our commitment to achieving them.
We’ve come a long way in our efforts to build a comprehensive platform for creators of all levels, but there’s still much to be done. To truly become the go-to destination for creators, we need to keep improving our tools and technology, explore new ways to help creators engage with their audiences, grow their careers, and monetize their work.
In fact, looking at our roadmap, with the changes we are making and what we have planned to share at our upcoming Stream On event, I’m confident that 2023 will be a year where consumers and creators will see a steady stream of innovations unlike anything we have introduced in the last several years. I will share more about these exciting developments in the coming weeks.
Finally, I hope you will join me tomorrow for Unplugged.
And again, for those of you who are leaving, I thank you for everything you’ve done for Spotify and wish you every future success.
– Daniel
——-
— CNBC’s Ashley Capoot contributed to this report.
Elon Musk’s business empire is sprawling. It includes electric vehicle maker Tesla, social media company X, artificial intelligence startup xAI, computer interface company Neuralink, tunneling venture Boring Company and aerospace firm SpaceX.
Some of his ventures already benefit tremendously from federal contracts. SpaceX has received more than $19 billion from contracts with the federal government, according to research from FedScout. Under a second Trump presidency, more lucrative contracts could come its way. SpaceX is on track to take in billions of dollars annually from prime contracts with the federal government for years to come, according to FedScout CEO Geoff Orazem.
Musk, who has frequently blamed the government for stifling innovation, could also push for less regulation of his businesses. Earlier this month, Musk and former Republican presidential candidate Vivek Ramaswamy were tapped by Trump to lead a government efficiency group called the Department of Government Efficiency, or DOGE.
In a recent commentary piece in the Wall Street Journal, Musk and Ramaswamy wrote that DOGE will “pursue three major kinds of reform: regulatory rescissions, administrative reductions and cost savings.” They went on to say that many existing federal regulations were never passed by Congress and should therefore be nullified, which President-elect Trump could accomplish through executive action. Musk and Ramaswamy also championed the large-scale auditing of agencies, calling out the Pentagon for failing its seventh consecutive audit.
“The number one way Elon Musk and his companies would benefit from a Trump administration is through deregulation and defanging, you know, giving fewer resources to federal agencies tasked with oversight of him and his businesses,” says CNBC technology reporter Lora Kolodny.
To learn how else Elon Musk and his companies may benefit from having the ear of the president-elect watch the video.
Elon Musk attends the America First Policy Institute gala at Mar-A-Lago in Palm Beach, Florida, Nov. 14, 2024.
Carlos Barria | Reuters
X’s new terms of service, which took effect Nov. 15, are driving some users off Elon Musk’s microblogging platform.
The new terms include expansive permissions requiring users to allow the company to use their data to train X’s artificial intelligence models while also making users liable for as much as $15,000 in damages if they use the platform too much.
The terms are prompting some longtime users of the service, both celebrities and everyday people, to post that they are taking their content to other platforms.
“With the recent and upcoming changes to the terms of service — and the return of volatile figures — I find myself at a crossroads, facing a direction I can no longer fully support,” actress Gabrielle Union posted on X the same day the new terms took effect, while announcing she would be leaving the platform.
“I’m going to start winding down my Twitter account,” a user with the handle @mplsFietser said in a post. “The changes to the terms of service are the final nail in the coffin for me.”
It’s unclear just how many users have left X due specifically to the company’s new terms of service, but since the start of November, many social media users have flocked to Bluesky, a microblogging startup whose origins stem from Twitter, the former name for X. Some users with new Bluesky accounts have posted that they moved to the service due to Musk and his support for President-elect Donald Trump.
Bluesky’s U.S. mobile app downloads have skyrocketed 651% since the start of November, according to estimates from Sensor Tower. In the same period, X and Meta’s Threads are up 20% and 42%, respectively.
X and Threads have much larger monthly user bases. Although Musk said in May that X has 600 million monthly users, market intelligence firm Sensor Tower estimates X had 318 million monthly users as of October. That same month, Meta said Threads had nearly 275 million monthly users. Bluesky told CNBC on Thursday it had reached 21 million total users this week.
Here are some of the noteworthy changes in X’s new service terms and how they compare with those of rivals Bluesky and Threads.
Artificial intelligence training
X has come under heightened scrutiny because of its new terms, which say that any content on the service can be used royalty-free to train the company’s artificial intelligence large language models, including its Grok chatbot.
“You agree that this license includes the right for us to (i) provide, promote, and improve the Services, including, for example, for use with and training of our machine learning and artificial intelligence models, whether generative or another type,” X’s terms say.
Additionally, any “user interactions, inputs and results” shared with Grok can be used for what it calls “training and fine-tuning purposes,” according to the Grok section of the X app and website. This specific function, though, can be turned off manually.
X’s terms do not specify whether users’ private messages can be used to train its AI models, and the company did not respond to a request for comment.
“You should only provide Content that you are comfortable sharing with others,” read a portion of X’s terms of service agreement.
Though X’s new terms may be expansive, Meta’s policies aren’t that different.
The maker of Threads uses “information shared on Meta’s Products and services” to get its training data, according to the company’s Privacy Center. This includes “posts or photos and their captions.” There is also no direct way for users outside of the European Union to opt out of Meta’s AI training. Meta keeps training data “for as long as we need it on a case-by-case basis to ensure an AI model is operating appropriately, safely and efficiently,” according to its Privacy Center.
Under Meta’s policy, private messages with friends or family aren’t used to train AI unless one of the users in a chat chooses to share it with the models, which can include Meta AI and AI Studio.
Bluesky, which has seen a user growth surge since Election Day, doesn’t do any generative AI training.
“We do not use any of your content to train generative AI, and have no intention of doing so,” Bluesky said in a post on its platform Friday, confirming the same to CNBC as well.
Liquidated damages
Another unusual aspect of X’s new terms is its “liquidated damages” clause. The terms state that if users request, view or access more than 1 million posts – including replies, videos, images and others – in any 24-hour period they are liable for damages of $15,000.
While most individual users won’t easily approach that threshold, the clause is concerning for some, including digital researchers. They rely on the analysis of larger numbers of public posts from services like X to do their work.
X’s new terms of service are a “disturbing move that the company should reverse,” said Alex Abdo, litigation director for the Knight First Amendment Institute at Columbia University, in an October statement.
“The public relies on journalists and researchers to understand whether and how the platforms are shaping public discourse, affecting our elections, and warping our relationships,” Abdo wrote. “One effect of X Corp.’s new terms of service will be to stifle that research when we need it most.”
Neither Threads nor Bluesky have anything similar to X’s liquidated damages clause.
Meta and X did not respond to requests for comment.
A recent Chinese cyber-espionage attack inside the nation’s major telecom networks that may have reached as high as the communications of President-elect Donald Trump and Vice President-elect J.D. Vance was designated this week by one U.S. senator as “far and away the most serious telecom hack in our history.”
The U.S. has yet to figure out the full scope of what China accomplished, and whether or not its spies are still inside U.S. communication networks.
“The barn door is still wide open, or mostly open,” Senator Mark Warner of Virginia and chairman of the Senate Intelligence Committee told the New York Times on Thursday.
The revelations highlight the rising cyberthreats tied to geopolitics and nation-state actor rivals of the U.S., but inside the federal government, there’s disagreement on how to fight back, with some advocates calling for the creation of an independent federal U.S. Cyber Force. In September, the Department of Defense formally appealed to Congress, urging lawmakers to reject that approach.
Among one of the most prominent voices advocating for the new branch is the Foundation for Defense of Democracies, a national security think tank, but the issue extends far beyond any single group. In June, defense committees in both the House and Senate approved measures calling for independent evaluations of the feasibility to create a separate cyber branch, as part of the annual defense policy deliberations.
Drawing on insights from more than 75 active-duty and retired military officers experienced in cyber operations, the FDD’s 40-page report highlights what it says are chronic structural issues within the U.S. Cyber Command (CYBERCOM), including fragmented recruitment and training practices across the Army, Navy, Air Force, and Marines.
“America’s cyber force generation system is clearly broken,” the FDD wrote, citing comments made in 2023 by then-leader of U.S. Cyber Command, Army General Paul Nakasone, who took over the role in 2018 and described current U.S. military cyber organization as unsustainable: “All options are on the table, except the status quo,” Nakasone had said.
Concern with Congress and a changing White House
The FDD analysis points to “deep concerns” that have existed within Congress for a decade — among members of both parties — about the military being able to staff up to successfully defend cyberspace. Talent shortages, inconsistent training, and misaligned missions, are undermining CYBERCOM’s capacity to respond effectively to complex cyber threats, it says. Creating a dedicated branch, proponents argue, would better position the U.S. in cyberspace. The Pentagon, however, warns that such a move could disrupt coordination, increase fragmentation, and ultimately weaken U.S. cyber readiness.
As the Pentagon doubles down on its resistance to establishment of a separate U.S. Cyber Force, the incoming Trump administration could play a significant role in shaping whether America leans toward a centralized cyber strategy or reinforces the current integrated framework that emphasizes cross-branch coordination.
Known for his assertive national security measures, Trump’s 2018 National Cyber Strategy emphasized embedding cyber capabilities across all elements of national power and focusing on cross-departmental coordination and public-private partnerships rather than creating a standalone cyber entity. At that time, the Trump’s administration emphasized centralizing civilian cybersecurity efforts under the Department of Homeland Security while tasking the Department of Defense with addressing more complex, defense-specific cyber threats. Trump’s pick for Secretary of Homeland Security, South Dakota Governor Kristi Noem, has talked up her, and her state’s, focus on cybersecurity.
Former Trump officials believe that a second Trump administration will take an aggressive stance on national security, fill gaps at the Energy Department, and reduce regulatory burdens on the private sector. They anticipate a stronger focus on offensive cyber operations, tailored threat vulnerability protection, and greater coordination between state and local governments. Changes will be coming at the top of the Cybersecurity and Infrastructure Security Agency, which was created during Trump’s first term and where current director Jen Easterly has announced she will leave once Trump is inaugurated.
Cyber Command 2.0 and the U.S. military
John Cohen, executive director of the Program for Countering Hybrid Threats at the Center for Internet Security, is among those who share the Pentagon’s concerns. “We can no longer afford to operate in stovepipes,” Cohen said, warning that a separate cyber branch could worsen existing silos and further isolate cyber operations from other critical military efforts.
Cohen emphasized that adversaries like China and Russia employ cyber tactics as part of broader, integrated strategies that include economic, physical, and psychological components. To counter such threats, he argued, the U.S. needs a cohesive approach across its military branches. “Confronting that requires our military to adapt to the changing battlespace in a consistent way,” he said.
In 2018, CYBERCOM certified its Cyber Mission Force teams as fully staffed, but concerns have been expressed by the FDD and others that personnel were shifted between teams to meet staffing goals — a move they say masked deeper structural problems. Nakasone has called for a CYBERCOM 2.0, saying in comments early this year “How do we think about training differently? How do we think about personnel differently?” and adding that a major issue has been the approach to military staffing within the command.
Austin Berglas, a former head of the FBI’s cyber program in New York who worked on consolidation efforts inside the Bureau, believes a separate cyber force could enhance U.S. capabilities by centralizing resources and priorities. “When I first took over the [FBI] cyber program … the assets were scattered,” said Berglas, who is now the global head of professional services at supply chain cyber defense company BlueVoyant. Centralization brought focus and efficiency to the FBI’s cyber efforts, he said, and it’s a model he believes would benefit the military’s cyber efforts as well. “Cyber is a different beast,” Berglas said, emphasizing the need for specialized training, advancement, and resource allocation that isn’t diluted by competing military priorities.
Berglas also pointed to the ongoing “cyber arms race” with adversaries like China, Russia, Iran, and North Korea. He warned that without a dedicated force, the U.S. risks falling behind as these nations expand their offensive cyber capabilities and exploit vulnerabilities across critical infrastructure.
Nakasone said in his comments earlier this year that a lot has changed since 2013 when U.S. Cyber Command began building out its Cyber Mission Force to combat issues like counterterrorism and financial cybercrime coming from Iran. “Completely different world in which we live in today,” he said, citing the threats from China and Russia.
Brandon Wales, a former executive director of the CISA, said there is the need to bolster U.S. cyber capabilities, but he cautions against major structural changes during a period of heightened global threats.
“A reorganization of this scale is obviously going to be disruptive and will take time,” said Wales, who is now vice president of cybersecurity strategy at SentinelOne.
He cited China’s preparations for a potential conflict over Taiwan as a reason the U.S. military needs to maintain readiness. Rather than creating a new branch, Wales supports initiatives like Cyber Command 2.0 and its aim to enhance coordination and capabilities within the existing structure. “Large reorganizations should always be the last resort because of how disruptive they are,” he said.
Wales says it’s important to ensure any structural changes do not undermine integration across military branches and recognize that coordination across existing branches is critical to addressing the complex, multidomain threats posed by U.S. adversaries. “You should not always assume that centralization solves all of your problems,” he said. “We need to enhance our capabilities, both defensively and offensively. This isn’t about one solution; it’s about ensuring we can quickly see, stop, disrupt, and prevent threats from hitting our critical infrastructure and systems,” he added.