I recently opened Netflix and was prompted to watch an episode of "Saturday Night Live." When I clicked, I was told I actually wouldn't be tuning in for the cold open — because I pay Netflix the least amount of money possible for its ad-supported tier, the show wasn't available to me. I could upgrade, though, by paying an extra $10 or more indefinitely for an ad-free plan, which would come with better quality video, the ability to add my account to more devices, and the privilege of watching a show that has aired on basic cable for 50 years.

Increasingly, streaming content is subject to tiers and the trend of "premiumization." For years, companies like Netflix, Max, and Disney+ fought the so-called streaming wars — losing money because of pricey content, fierce competition, and high churn rates among users who hopped from platform to platform. But 2024 was the year things turned around. Spotify, Netflix, and Disney+ were all posting profits, finally making investors happy.

To keep investors happy, the subscriptions that appear as second thoughts on your credit card statement are still creeping up. Premiumization has long been a driver of tiered spending in the physical world — from airplane seats to airport lounges to Disney World — and now digital streamers are harnessing its power. The price hikes are working because they've got us hooked: Most people who quit Netflix come back, lured by a new cast on "Love Is Blind" or some other viral original premiere. Netflix prices went up again in January, Spotify is reportedly considering a new plan that will give users who pay extra more premium content, and Amazon Music has price hikes and more exclusive content in the works, too. Even YouTube TV went up by $10 a month last year, coming to a total of $82.99.

As streaming finally matures, our wallets may be the ultimate losers of the streaming wars.

Almost any service you try to buy today will offer add-ons. Even discount gyms like Planet Fitness offer tiered plans. What's different about these streaming companies is they were born in an era where they promised us more for less — you could listen to the entire library of Spotify rather than buying each track or album, and say goodbye to those viruses hidden in LimeWire downloads. In 2012, Spotify CEO Daniel Ek said he sought to create something "better than piracy," and that the company wanted "to bring music to every single person and bring it to every moment of their life." Netflix gave us not just ways to ditch DVDs and snail mail, but access to its own hit content anywhere, anytime, without any annoying ads (goodbye forever, Geico caveman). They reinvented the way we watched TV and listened to music — streaming was so cheap and flexible that it easily hooked millennials.

That's when the streaming wars took off in earnest. Companies scrambled to gobble up existing shows and new talent for their content. Prices were low, and it felt like cinephiles and TV buffs had more control and choice than ever. Streamers advertised themselves as if they cared if we, the watchers, had a good time. On a 2020 call, Netflix's former CEO Reed Hastings said: "We want to be the safe respite where you can explore, you can get stimulated, have fun and enjoy — and have none of the controversy around exploiting users with advertising." Now, that safe haven is only offered to those who shell out more money, as Hastings ate his words and launched a cheaper ad-supported tier for Netflix in 2022. When I was blocked from watching "SNL," the Netflix app blamed licensing agreements, which make a small portion of the content it offers unavailable on the ad-supported tier. As of 2023, Peacock no longer offers the free, ad-supported tier it launched with, and now charges $7.99 a month for its cheapest plan. Max announced in February that it would remove access to Bleacher Report and CNN Max from its basic tier.

"This idea of the good stuff costing a little bit more isn't exactly new," says Max Signorelli, the consumer research lead for media and entertainment at the consultancy firm Omdia. "But certainly, long gone are the times where these relatively new streaming offerings were marketing themselves as the cheap, viable alternative to traditional media sources."

Today, streamers aren't alternatives to cable; they're the mainstream. Combining subscription and ad revenue was the model that made companies like Verizon and Comcast cable giants. "A lot of the newer media companies came out of the gate with a tech mindset of: scale first, we'll worry about profits and revenue later," Nii Addy, the chief marketing officer at the streaming company Philo, tells me. "We're at that inflection point where they're having to turn that scale into profits." Ironically, they're following in the footsteps of the companies they sought to disrupt. "A lot of these new media companies are with one hand killing the legacy cash cows, but then they're also nursing their own, and it's based on the exact same model," Addy says.

What's good about tiered pricing is they give you the choice. It's not like it forces you to be in business class. Z. John Zhang, a professor of marketing at Wharton

Netflix had an exceptional 2024, making $39 billion in revenue, an increase of 16% from 2023. It celebrated the news and simultaneously announced a price hike: "We continue to invest in programming and deliver more value for our members, we will occasionally ask our members to pay a little more so that we can re-invest to further improve Netflix," the company said in its January earnings letter. Warner Bros. Discovery, which includes Max, saw its streaming business make $677 million in profit in 2024, up from $103 million the year before. Peacock revenue grew by 46% from 2023 to 2024, coming to $4.9 billion, although it still did not post a profit. Paramount+ says it is on track to reach full-year profitability in 2025.

The music streamers have stumbled for even longer, trying to disrupt an industry that was wildly profitable before Napster and LimeWire decimated it. Spotify, which rarely made a profit through 2023, turned itself around 2024 and had its first profitable year. Now, Bloomberg reports the company is considering charging an additional $5.99 for a Music Pro plan on top of premium subscription prices that hit $11.99 a month (which is up from the $9.99 it charged from 2011 until 2023), in hopes of drawing music superfans with perks like higher-quality audio, remixing tools, and access to concert tickets. In the not-so-distant future, premium versions of Taylor Swift songs may be available only to those who can afford it. Spotify declined to confirm the rumored details for this story.

The rumors come as the music streaming game is changing; Spotify signed a deal in January with the world's largest music company, Universal Music Group, to advance what is seen as a new streaming 2.0 era in music, driven by more exclusive content and personalization. Amazon Music, too, has expanded its relationship with UMG, announced vague plans to develop exclusive content, and has raised its subscription prices by $1 a month. Amazon did not respond to a request for comment. But replacing one price for nearly all the world's music, tiers will separate the superfans from the casual listeners — and some superfans may even subscribe to more than one music streamer if the exclusive offerings start to further differentiate the catalogs of Spotify and Amazon.

Ultimately, entertainment tiers might not be such a bad deal for consumers. Z. John Zhang, a professor of marketing at the University of Pennsylvania's Wharton Business School, says tiered pricing actually does democratize these services. Different pricing levels allow people who want to pay less to do so and still get decent access to content, subsidized by those willing to pay for premiumization. "What's good about tiered pricing is they give you the choice. It's not like it forces you to be in business class," he says. "For the people who pay the higher price, it's voluntary, they want to. The customers all become better off; they all have their own choice."

For now, streamers are taking divergent approaches: Some are charging more for add-on content, and others are starting to take perks away from those who pay the least. All of this will likely result in the bottom-tier price being a worse experience across the board. On airplanes, I'll take the smallest seat and forgo water if it's not free. I'll watch ads with my Netflix and Hulu if it means I can justify subscribing to both. If it wants me to pay more each month, Spotify will have to come up with something particularly exclusive and enticing, like a jump on concert tickets, to beat out the bots that plague Ticketmaster. But if more good content goes behind the steeper paywall, it'll be a test to see how long the cheap subscribers like me can hold out.

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Amanda Hoover is a senior correspondent at Business Insider covering the tech industry. She writes about the biggest tech companies and trends.

• Backlash against Elon Musk and DOGE has hit Tesla, with the brand becoming a target for protests and vandalism.
• Business Insider spoke to four Tesla owners about why they decided to sell their EVs.
• They said Musk's work with DOGE and fear of being harassed were the main reasons for selling.

Things might be tricky for Tesla, but at least it has one new customer — President Donald Trump, who said Tuesday he'd buy a Tesla in a show of support for CEO Elon Musk.

Away from the White House, some longtime Tesla owners have had enough.

Business Insider spoke to four people who recently sold their vehicles in response to Musk's work gutting the federal government with DOGE.

It comes as backlash against Tesla mounts, with showrooms and vehicles becoming targets for protests.

"I sold my Tesla because I found it no longer reflects my values. I was embarrassed to be seen driving it," Scott Oran, a real estate developer who lives near Boston, told Business Insider.

Oran said he was initially drawn to his 2018 Model 3 because of the company's environmental credentials and promise to address the climate crisis "in a constructive manner."

Despite his Model 3 being a "very good car," Musk's work directing government layoffs with DOGE was too much for Oran.

"I saw its sale as a protest against Elon Musk and his work at DOGE. Musk was not elected. He's gutting our American government," he said.

"He's illegally firing federal workers. He's illegally dismantling federal agencies. He's spreading conspiracy theories, and he's empowering extremists. In short, he's sowing chaos and confusion. And I felt that we need to send a message to him and others like him that that is not American democracy," Oran added.

While the majority of car buyers tend to be swayed more by price and performance than politics, Tesla and other EV brands have traditionally appealed to customers who care about environmentalism — the demographic likely to object to Musk's newfound interest in far-right politics.

The second former Tesla owner, who did not want to be named to avoid potential retaliation, said: "What attracted me the most initially was trying to get away from fossil fuels."

While his 2021 Model 3 performance variant had issues including battery and computer problems, he said he was "blown away" by its performance.

The former owner described the controversial gesture Musk made at a Trump inauguration rally as "the straw that broke the camel's back," prompting him to trade in the Tesla late last month at a valuation of $22,000, according to a purchase contract viewed by BI.

"Every tweet that he's written since then has just added more nails to the coffin in my mind," they said.

Protests and harassment

As the backlash to Musk and the widespread government layoffs enacted by DOGE has grown, Tesla has increasingly borne the brunt of public ire.

High-profile owners including singer Sheryl Crow have sold their cars in response to Musk's actions, and a nationwide protest movement, "Tesla Takedown," has staged protests at Tesla showrooms across the country.

Cybertrucks and other Tesla vehicles have also been vandalized, and police in Oregon are investigating after shots were fired at a Tesla showroom.

For some Tesla owners, fear of being harassed has played a part in the decision to sell.

"I've been having instances where drivers would brake-check me or do rolling roadblocks, and I've had a few people flip me off for no apparent reason," said the former Model 3 performance owner.

"This made my decision all more clear — I have a newborn baby and even though I know I could be defensive in my driving, I'm not comfortable having my son in the car and having to deal with the harassment."

Oran said he hadn't experienced any backlash, but had seen Tesla drivers being heckled while attending a peaceful Tesla Takedown protest at a Boston dealership. "I imagined myself being in that situation, and I just wouldn't want to have that happen."

Rivals look to overtake

Tesla's waning fortunes appear to be benefiting its EV rivals.

Two former owners who spoke to BI said they've swapped their Teslas for a Polestar. The Swedish EV brand has been aggressively targeting Tesla customers in recent weeks.

The third former owner, who had a Model Y, said they were initially skeptical about rival vehicles, but were won over by the Polestar 3. "The build quality is fantastic, it drives much better than a Tesla and the interior feels like a real car and not a cheap toy."

Oran, who now drives a Hyundai Ioniq 5 EV, said: "Although Tesla did create the market for electric vehicles, there are now a number of really good alternatives."

Tesla owners who do decide to sell will find the used car market saturated with pre-owned Model 3s and Ys, with resale values plunging in recent years.

The fourth former owner, who had a Model 3, said his decision to sell was partly motivated by fear that resale values could drop even further due to Musk's conduct.

"I wasn't offended enough by his political behavior to sell the car, but I didn't want the value of my car to be tied to his political behavior," said the owner, who traded in his 2018 Model 3 for about $17,000.

"Elon Musk is getting a lot of flack for his behavior around the government, but this isn't necessarily the bottom. His behavior could get far worse … who's going to buy his car then?" the person, who now owns a Genesis EV, added.

Tesla did not respond to a request for comment.

• Pearl Whamond is among the Canadians boycotting US products in protest of President Donald Trump.
• The Montreal resident said Trump's positions on tariffs and annexation have fueled Canadian pride.
• She also used to travel often to the States for shopping or weekend getaways, but not anymore.

This as-told-to essay is based on a conversation with Pearl Whamond, a 55-year-old nurse and mother of three who lives in Montreal. She's among the Canadians boycotting American products due to President Donald Trump's policies and comments relating to Canada, including tariffs and interest in making the country a US state. This story has been edited for length and clarity.

I've always been very proud to be Canadian. I also have really enjoyed visiting the States.

But there seems to be a change in some of the US population. I'm feeling hatred toward Canada as if we're just piggybacking off the States or taking the US for granted. Americans used to feel like our cousins, nationality-wise, but I'm not feeling that anymore.

Now I'm noticing a bunch of national pride that we didn't see before, especially in Quebec, because Quebec is infamous in Canada for being the black sheep. We're the ones who have the French-speaking majority, so if Quebec is pissed off enough to fly the Canadian flag, something's really wrong.

I wouldn't go over the border these days, and I'm trying to avoid buying American products.

I don't feel safe traveling to the US

I'm half Filipino and half Irish. I don't look white. My husband is Mexican. My three kids, 25, 20, and 15, are Black. I'm afraid to go to the States. I would be concerned about going down due to what I'm hearing about ICE and deportations.

My husband has permanent residency in Canada, but if he got separated from me in the US, and I couldn't speak on his behalf, I don't know if he could explain himself well enough to get out of a scenario. If there's any question of anything like that happening, I'll just stay on my side of the border.

We're right up over Vermont, about an hour and a half drive away, and we used to go down just to grocery shop. I drove down regularly to see my friends in New Jersey and Boston. Just last summer, I took my girls to New York to see "Six" on Broadway because my daughter's a theater kid.

We used to do weekends like that, and my kids loved it there. Our dollar has not been strong for a long while, but it was worth it to me to spend the extra in exchange for that experience. Not anymore.

I'm boycotting American brands

Many people across Canada are trying to buy products made in Canada. There are all these online groups promoting that. Some people are very, very strict, and they're not getting anything from the US. Other people are doing what they can.

My husband used to call me the Amazon queen. I haven't ordered anything from Amazon since February 5. I've cancelled my Prime membership. I'm not shopping at Walmart or McDonald's.

Food-wise, it's pretty easy to get home-grown produce. I had a hard time finding broccoli not from the US for a while. We still have the US strawberries at $1.99, which are being left on the shelf. In my neighborhood, we're paying $4.99 to $6.99 for Quebec strawberries. People are willing to pay more to buy from home.

Even my 15-year-old, who is very politically active, and her friends are boycotting American products.

There's also an awful lot of supportive Americans saying, "We're on your side. We're trying to buy Canadian. We understand how you feel about our government. What they're doing is not right. We shouldn't threaten anyone with annexation, let alone Canada, which has always been our ally."

But those who have the opposing opinion are a lot more aggressive and a lot more hate-filled, actually. It may be nine out of 10 people will be friendly and wonderful like they've always been, but it just takes that one, and that's what scares me.

I don't want to lose the close relationship between Canada and the US

I don't know anyone here who wants to be a 51st state. We like our healthcare. We like our education. We like Canada. We grew up here. We're Canadians. Nothing against the US, but we don't want to be absorbed.

We respect Americans. We respect your anthem. We fight by your side in every single war. We love your country like we always have. We're just really sad to see how some Americans are thinking of us now, and we're angry with the way your president is treating us.

Even if the tariffs issue ends or if there's another president in four years, some Canadians are saying, "Once bitten, twice shy." There have been too many threats and too much back-and-forth. It feels like bullying, it feels threatening, and as a country, we're not appreciating it.

And even if the other party gets elected in four years, in eight years it could be more of the same. It's been done once, so it feels like we're fair game now.

I grew up feeling like the US and Canada were great allies and great friends, and I don't want to let go of that. I don't want to let go of that warm, fuzzy feeling that you've got our back and we've got yours. So, I guess we're just waiting to see how far this will go.

Do you have a story to share about the relationship between the US and Canada? Contact this reporter at [email protected].

From the moment Donald Trump was reelected, Harvard University has been scrambling to confront what it views as an existential threat posed by the new administration.

Trump is targeting elite universities on a host of fronts, from their diversity initiatives and handling of pro-Palestinian protests to billions of dollars in student aid and government support. Last year, federal grants accounted for 11% of Harvard's operating revenue and paid for two-thirds of its sponsored research. In addition, Trump has proposed taxing the university's massive endowment of $53 billion by as much as 35% — a threat that Harvard's president, Alan Garber, has said "keeps me up at night." On Monday, due to "rapidly shifting federal policies," the university announced it was instituting a hiring freeze, reducing admissions to some of its graduate programs, and issuing a university-wide directive to limit spending.

"This is a crisis," says Todd Wolfson, the president of the American Association of University Professors, which represents 44,000 members at more than 500 campuses nationwide. "It's the greatest mortal threat that the higher education sector has ever faced, without a doubt."

Harvard hopes to limit the damage of Trump's expected funding cuts by forming alliances with people close to him. “Strange bedfellows,” one lobbyist observed. “Get used to it.”

In response, Harvard has been quietly formulating a new lobbying strategy — one unlike anything the university has ever undertaken. According to interviews with more than two dozen lobbyists, funders, professors, and alumni, Harvard's plan is threefold. First, the university has hired Ballard Partners, MAGAworld's leading lobbying firm, to represent its interests in Washington. Second, Harvard is exploring ways to ingratiate itself with Trump's inner circle by building alliances with conservatives he trusts. And third, the school has joined talks with colleges and universities in red states, looking to present a case that Trump's proposed cuts would hurt not just Ivy League intellectuals, but local economies in deep-red districts.

Such moves are out of character for Harvard, which has long considered itself in a league unto itself. "Harvard has a chance to minimize the damage of the Trump administration," says Jeff Hauser, a Harvard alum who serves as executive director of the Revolving Door Project, a government watchdog group. "But it's only going to be in solidarity with other institutions with different public profiles. They're more in it together than they might realize."

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Harvard was ramping up its lobbying efforts even before Trump's victory last November. In 2024, the school spent more on lobbying than it had in the past 15 years. But those familiar with Harvard's new strategy say it began in earnest two weeks before Trump's inauguration, when Harvard hired Ballard Partners as one of its leading lobbyists. It was a shrewd move — Brian Ballard, the firm's founder, is a close Trump ally who maintains an office up the road from Mar-a-Lago. What's more, Susie Wiles and Pam Bondi — Trump's chief of staff and attorney general — are both alums of the firm.

Hiring Ballard signaled Harvard's willingness to "play by Trump's rules," says Hilary Braseth, a Harvard alum who serves as executive director of OpenSecrets, a nonpartisan group that tracks political influence. The lobbying firm, she adds, gives Harvard "a direct line to the Oval Office."

Ballard's first priority for Harvard is to find out where cuts are most likely to come, and which programs might be targeted. "There's a big learning curve that comes with a new administration, particularly a Trump administration," says Dan McFaul, a Ballard lobbyist who's working on the Harvard account alongside the firm's founder. "Information seems to be the most valuable thing. What's the next shoe to drop? How do we address this? How do we respond to the next grant cancellation?"

While the price of Harvard's contract with Ballard won't be public until April, it's not cheap. According to three people familiar with the deal, the university is on track to pay the lobbying firm well into the six figures this year. Justin Sayfie, a partner at Ballard, characterized its agreement with Harvard as "a monthly retainer that is customary for firms of our caliber on K Street in Washington."

Other universities are following Harvard's lead. Public records show that institutions of higher learning are hiring lobbyists at more than twice the pace they did after Joe Biden won the presidency in 2020, or when Trump won his first term in 2016. Among those who have brought on new lobbyists in recent weeks are Columbia, MIT, New York University, Oklahoma State University, and Arizona State.

Beyond the hiring of Ballard, Harvard is exploring ways to make inroads into Trump's inner circle. According to two people with knowledge of the discussions, the school is considering inviting Trump loyalists to speak on campus, as a way to blunt charges of liberal bias and to curry favor with the administration. In interviews with BI, some lobbyists and experts in government relations suggested inviting Trump or Vice President JD Vance to deliver the commencement address at Harvard, or hosting MAGA figures at Harvard's Kennedy School. "You make yourself a smaller target if you do this," says one lobbyist based in Washington.

Finally, Harvard is seeking to build alliances with red-state colleges and universities, to present a united front in Washington. The message, according to several people familiar with the talks, is that cuts to federal research grants and student aid will kill jobs and short-circuit opportunities for innovation in all 50 states. "A great way to hurt a local economy is to kick a university in the teeth," one education lobbyist says.

The hope is that the red-state institutions can make the case for supporting higher education to the Republicans who represent them in Congress. Sen. Katie Britt of Alabama, for instance, has already spoken out against proposed cuts to the National Institutes of Health that would profoundly affect the University of Alabama.

Such alliances, insiders say, are the new norm for universities and colleges. "Strange bedfellows," observes one lobbyist with years of experience in higher education. "Get used to it."

Still, the new strategy is fraught with peril for Harvard. Forging alliances with Trump supporters could anger some of the school's most prominent donors, and provoke unrest among students and faculty. Allison P. Farrell, an opinion writer at the Harvard Crimson, recently called on the university to "not be complicit" with the new administration. "If Harvard survives by acceding to Trump," she wrote, "it has forfeited its raison d'être — it can no longer claim to be an institution dedicated to seeking and defending truth." One education lobbyist — who, like many, spoke with Business Insider on the condition of anonymity to maintain their professional relationships — called Harvard's new strategy "a pact with the devil."

While that might be a popular view on campus, at least a few professors support Harvard's efforts to make its case in Trumpian terms. Avi Loeb, a noted theoretical physicist who was critical of the university's handling of pro-Palestinian protests last year, sees an opportunity to remind Trump that research institutions like Harvard play a crucial role in driving scientific discoveries and American innovation. "Make Science Great Again!" he says. "Science is not the occupation of the elites. The Trump administration should understand that."

Unless Harvard can find a way to maintain the flow of federal support that helps underwrite its operations and research, students and faculty will be the ones who pay the price. Less federal aid could mean tighter budgets, fewer jobs, and less student aid. "It's icky, but Trump can hurt you," says one lobbyist who's based in Washington. "You're trying to mitigate risk."

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Beyond traditional lobbying, universities and colleges are attempting to reach out to Trump's core constituencies. Ideas that have been floated include running commercials during the NCAA basketball tournament as well as booking school administrators on conservative outlets like Fox News and on Joe Rogan's podcast. Syracuse University, for instance, is running advertisements on subway trains in the nation's capital, touting its status as "higher education's only national veterans resource center." After the president of Yeshiva University, Rabbi Ari Berman, delivered the benediction at Trump's inauguration, the school took out ads on Facebook and Instagram to highlight the event.

And while some universities are eager to work with Harvard, others see a value in distancing themselves from Ivy League institutions that have drawn Trump's ire as bastions of "wokeness." Isaac Kamola, a political science professor at Trinity College who leads the Center for the Defense of Academic Freedom, says schools should remind government officials to "not conflate higher education in America with Harvard."

After Trump canceled $400 million in federal grants and contracts to Columbia, Harvard announced a hiring freeze due to "rapidly shifting federal policies."

Still, Harvard's deep pockets and its affiliation with Ballard mean that red-state universities are unlikely to reject an invitation to work together. "There's strength in collective action, and that goes both ways for Harvard," says one education lobbyist.

The threat to elite schools is likely to mount in the coming months. The Trump administration is investigating 60 schools, including Harvard, for their handling of "antisemitic harassment and discrimination" during campus protests against the war in Gaza. Last week, the administration announced it was canceling $400 million in federal grants and contracts to Columbia — another school on the list — and warned that more cuts are likely. In a statement to Business Insider, the White House decried what it calls "a lot of waste, fraud, and abuse" of taxpayer money in higher education. (Harvard declined requests for comment.)

In the meantime, the university remains a favorite punching bag for the right. Last month, Steve Bannon — a Harvard alum — came to a conference held near Harvard Square to bash the university. "We need to go into these elite institutions and cut out all the money," Bannon told an assembly of conservative students. "Once you cut that money off, that's a bitch slap. They'll start paying attention."

The conference was sponsored in part by the hedge funder and billionaire alumnus Ken Griffin, a megadonor both to Harvard and to Republican causes. Griffin, whose name appears on Harvard's Graduate School of Arts and Sciences, has announced he is withholding new contributions until Harvard decides to "embrace Western values," ignore "whiny snowflakes," and end what he calls a "DEI agenda that seems to have no real endgame."

Given the current political climate, Harvard and other elite schools have no illusions that they can fully fend off the tsunami of cuts being proposed by the White House. For now, Harvard is focused on ways to limit the damage. And for that, the more of Trump's allies it can enlist, the better. "This will be a delicate dance," says a prominent Harvard donor who supports Trump, "and Harvard can't afford to stumble."

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Dave Levinthal is an investigative journalist in Washington, DC. He was a reporter and editor at Business Insider until 2022.

• Klarna is restructuring teams and placing staff in a "talent pool" as it prepares for its US IPO.
• The company is pushing AI adoption while streamlining positions and cutting costs to become leaner.
• Employees tell BI that some changes haven't been without their challenges.

When John was told he'd been placed in Klarna's "talent pool" last year, he thought it meant a new opportunity within the company. Instead, it felt like a slow march toward the exit. For months, he waited, hoping to be matched with another position — an offer that never came. Eventually, Klarna offered him an exit package.

The talent pool seems like "a sneaky way of carrying out quiet layoffs," John, who asked BI to use a pseudonym to remain anonymous in order to protect his future job prospects, told Business Insider.

John was one of hundreds of employees who have found themselves in the precarious position of being placed in the talent pool ahead of a possible IPO by Klarna. The talent pool is a group of employees whose positions were eliminated but are kept on the payroll while they search for new positions within Klarna that match their skills. If they don't find a fit, they may be offered an exit package or choose to resign.

The Swedish fintech giant, once Europe's most valuable startup, confidentially submitted its draft registration to the Securities and Exchange Commission in November, though it's unclear if these plans will change with the current market volatility.

Klarna offers short-term financing to customers online and in stores at checkout in the form of split payment terms. It says it has more than 85 million customers and partnerships with over 600,000 retailers, including Apple, Adidas, and Airbnb.

As it readies itself for a potential public offering, Klarna has been shedding its startup skin and adopting the discipline of a public company — a transformation that, according to insiders, has come with growing pains.

The company has been restructuring teams, consolidating roles, and cutting costs in a bid to become leaner ahead of its public debut, according to Klarna employees past and present. Eleven current and former Klarna employees spoke to BI on the condition of anonymity to protect their future job propects.

The "talent pool"

Insiders suggest that the impending IPO and desire to be more efficient might be driving a more deliberate shift in staffing — what some people internally have described as "Klarnageddon" and a process entailing what they believe are "quiet layoffs."

CEO Sebastian Siemiatkowski has rejected the notion that the company is conducting layoffs. In an October episode of the "Grit" podcast, he said Klarna is not laying anyone off, "it's natural for people to leave, and that the company simply "stopped hiring due to AI," which, combined with a natural attrition rate of 20%, was leading to a smaller workforce.

In a January X post about Klarna's working practices, Siemiatkowski likened the way employees are given positions to a "consultant being staffed to a project." He added, "The closing of a team or position normally leads to a quick reassignment within weeks. and is NOT a job loss."

Employees say the reality is different, and Siemiatkowski's narrative of natural attrition and gains from AI doesn't fully align with their experiences.

Ten of the people BI spoke to said they believed the "talent pool" is part of a strategy to reduce headcount. Four people who were placed in the talent pool after their positions were eliminated describe this approach as being placed in limbo, waiting for a reassignment that might not materialize.

An internal document seen by BI, last updated in August, indicated that around 260 employees — roughly 7% of the workforce — were in the talent pool at the time.

Klarna said the number of employees between assignments in August was significantly lower than 260 and has remained so since. It added that the majority of employees in the talent pool are on long-term leave, such as parental leave or between assignments.

Klarna also said last year more than 800 people were matched to a new position from the pool and that individuals in the talent pool are matched with open positions every week. However, the company did not respond to BI's questions about how many employees in total were in the talent pool throughout 2024 and how many of them were not offered another position within the company.

From hypergrowth to leaner operations

Klarna's road to a possible IPO is a stark contrast to its pandemic-era boom. In 2021, the company reached a $45.6 billion valuation, went on a hiring spree, and expanded aggressively in the US. Klarna's headcount steadily grew between 2019 to 2022, when it hit a peak of 5,441 employees, according to its 2022 annual report. However, a broader market downturn in 2022 slashed Klarna's valuation to $6.7 billion, leading to 800 layoffs.

Now, Klarna is recalibrating. In the past six months or so, it has reorganized divisions, including the engineering team, and more recently restructured its analytics division and formed a new "Product Insights" team. An internal document from October seen by BI revealed that for the 120 employees seeking roles in this new team, only 70 positions were available, leaving a surplus of 50 workers likely to be placed in the talent pool.

Some Klarna employees have voiced their frustration over the changes. In an October internal meeting with CFO Niclas Neglen, a recording of which was obtained by BI, one worker asked if leadership had considered the toll of "constant" restructuring on mental health. Another person asked in the comments section of the virtual meeting if the reorganization could "have been done more humanely and fairly." Neglen acknowledged the concern about the impact on employees' mental health but responded, "change is healthy."

The company also scrapped its annual "Smoooth Week" event for 2024, which used to bring all employees to its Stockholm headquarters. It's unclear whether this decision was related to cost-cutting. Klarna said it communicated internally that Smoooth Week will happen within an interval of two to three years.

Bullish on AI and cost-cutting measures

Throughout 2024, Siemiatkowski made bullish statements about how Klarna is using AI. In February of that year , the company made headlines after announcing that its AI customer service agents had been doing the equivalent work of 700 full-time human employees.

Initially, Klarna's AI efforts began with an in-house chatbot "Kiki" to summarize and answer questions based on internal documents, four people said. It has since expanded to other departments, such as using AI-generated imagery for marketing campaigns. In May, Klarna attributed some cost savings in the first quarter to AI. It said it cut its sales and marketing expenditure by 11% in that period and that "AI is responsible for 37% of the cost savings, or about $10 million on an annualized basis."

The company has an agreement with OpenAI to use its AI models and Siemiatkowski has actively encouraged staff to use AI in their daily work. In September, Siemiatkowski posted on Slack instructing employees to use OpenAI's o1 model. In the post, seen by BI, he said, "Dear AI nerds!!!! PLEASE Go and checkout the new OpenAI o1 model immediately!! Make sure you try it on at least one task and idea during your Friday work time!!!"

Engineers are using Microsoft's AI-powered coding tool, GitHub Copilot. Four engineers told BI it is mostly a support tool for troubleshooting and that it can be frustrating to use for coding because it can remove or add random brackets or commas, so they have to review the code base manually.

One former employee described Klarna's internal use of AI as "nice and sexy to show in the press," and another current employee said he uses it to draft text and brainstorm ideas, which he believes has made him a more efficient worker.

Klarna has also cut costs by reducing its reliance on external software. A specialized cost-cutting team — known internally as "The Terminator" — has been eliminating SaaS tools. In a November all-hands meeting, which BI obtained a recording of, Siemiatkowski celebrated the removal of more than 30 SaaS systems and set his sights on the next target: "Fuck Jira, fuck Confluence," he said, referring to Australian software firm Atlassian's products.

In an X post earlier this month, Siemiatkowski said Klarna estimates that it has "shut down" about 1,200 software as a service providers to help consolidate how it stores knowledge.

New compliance and communication measures

Klarna has also been tightening its internal controls, a common step before going public. Klarna's director of people and HR, Mikaela Mijatovic, told employees in a Slack post in December that it would begin testing employees in Sweden for alcohol and drugs, starting in January. Mijatovic said the move was "part of a larger effort to strengthen security across Klarna."

In a September all-hands meeting, a recording of which was obtained by BI, Siemiatkowski told employees the company would likely need to introduce new compliance measures, including tracking employee locations. He said for senior staffers, it could mean seeing their financial statements to "assess if someone is in trouble or could be compromised."

The company has also made changes to the way it wants employees to communicate internally. In May, Klarna's communications director, Johanna Nyman, instructed employees via Slack to avoid using direct messages for important discussions, instead favoring public team channels and internal wikis. The post was met with some resistance — 56 employees reacted with a thumbs-down emoji, according to screenshots viewed by BI.

The company's approach to internal meetings has also shifted. Recurring one-on-one meetings between managers and employees were scrapped in September, a move that some workers say has deprived them of a crucial space to discuss challenges.

Klarna has also been exploring ways of expanding beyond its core payments business. It recently internally advertised four jobs to help build a product that lets customers buy and sell stocks through its app. Siemiatkowski said in an X post last month that Klarna "will embrace crypto" going forward.

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Italian seismologists said the tremor hit at 1:25 a.m. local time on Thursday.

The Department of State's highest level travel warning has been issued for multiple countries.

Experts are warning of delays to services and possible interruptions to the delivery of benefits.

Tech evangelists predict the arrival of "superintelligence" any year now, but others doubt AI will ever produce its own Leonardos and Einsteins.

Driving the news: In a post on X Tuesday, OpenAI CEO Sam Altman touted the company's development of "a new model that is good at creative writing" and showed off its work — a thousand-word "metafictional" composition on "AI and grief."

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Why it matters: Creativity could be the final hurdle for AI to leap in proving it's humanity's peer — but until then, many see it as the last bastion of humanity's irreplaceability.

The big picture: Whether telling stories or researching scientific breakthroughs, today's generative AI isn't very good at creative leaps and novel insights.

• It's bounded by what it "knows" — the data it is trained on — and how it "thinks," by guessing the next word or pixel that best fulfills its prompt.

In science, our AI models aren't going to push the boundaries because they're too eager to please people and prove their utility, Thomas Wolf, HuggingFace's co-founder and chief science officer, wrote on X last week.

• Wolf called AI that does research "yes-men on servers."
• "To create an Einstein in a data center, we don't just need a system that knows all the answers, but rather one that can ask questions nobody else has thought of or dared to ask," Wolf argued.
• The benchmarks we're using to gauge AI's advances "consist of very difficult questions — usually written by PhDs — but with clear, closed-end answers... Real scientific breakthroughs will come not from answering known questions, but from asking challenging new questions and questioning common conceptions and previous ideas."

Getting AI to produce compelling art looks even more unlikely.

• Most work produced by AI is literally derivative. Of course, most artists, especially at the start of their careers, learn by imitation, and many human artworks are effectively collages, rewrites or remixes.
• But memorable artists develop distinctive voices by mixing their own experiences and obsessions with whatever they've learned from the artists they admire — and even their collages "sound like them."
• People seek out art because hearing those voices inspires them, leaving them feeling connected with the artist in a way that they cherish.

The short story Altman posted showed formal facility — but many of the responses on X found it, as I did, more exercise than expression.

Between the lines: Plenty of artists will find AI a valuable creative tool or an aid to brainstorming, just as many researchers will employ it to speed their work.

• But creation is likely to remain hard work for human beings. It takes effort to wrestle a vague idea in your head into words, images or any other material for an audience to encounter.
• This is the sort of friction that AI visionaries sometimes promise to liberate us from.

Yes, but: "Friction-free art" is inert. What sends off sparks is the struggle of a person's urge to express something against the limits of form and medium.

The bottom line: LLMs are like youngsters who have read a lot but do not have experience of the world. And right now there's not much of a way for AIs to get it.

• An LLM has never felt sunlight on its arm or raindrops on its head, known a parent or a child, given birth or faced death.
• It doesn't feel the need to share such experiences or to shape them into works of writing, or music, or any other form.

What's next: Maybe the fusion of generative AI with robotics will surprise us, and an embodied LLM will find itself moving toward something humans might recognize as art.

• But it's very possible AI will never be truly creative because it has no impulse to play around for the heck of it, to impress peers or best rivals, or to leave a little mark on the world. People give AI prompts, whereas human artists get their prompts from their own lives.

The world's largest retailer is clashing with China over the company's efforts to reduce the impact of President Trump's increased tariffs.

Why it matters: Walmart — whose brand is inextricably linked to low prices — is trying to leverage its monumental size to mitigate its own costs from the billowing international trade war.

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Driving the news: Officials from China's Ministry of Commerce met with Walmart executives on Tuesday to cry foul over the retailer pressuring local suppliers to absorb tariff hikes, according to a Chinese state media report.

• The Ministry of Commerce called for Chinese and American companies to work together in response to the tariffs.

Threat level: "If Walmart insists" ... "then what awaits Walmart is not just talk," state broadcaster China Central Television said on social media Wednesday, according to the WSJ.

Walmart did not respond to requests for comment.

• WSJ, citing people familiar with Tuesday's meeting, reported that the company offered to work with Chinese suppliers to "find ways to avoid damaging the interests of the parties involved."

Zoom out: Walmart's retail business in China is growing but was still less than 3% of the company's total sales in the 2024 fiscal year, according to an SEC filing.

• In that respect, the company has more to lose in the U.S. and other core markets if increased costs lead to price hikes.

Yes, but: Its exposure to Chinese supply lines is more substantial. Reuters has estimated that 60% of Walmart's shipments came from the country in 2023.

• Walmart has also made significant investments in its Chinese supply chain, having committed in 2019 to build or upgrade more than 10 logistics distribution centers in the country over the next 10 to 20 years.

Follow the money: "The retailer has historically had strong bargaining power over its Chinese suppliers and requests for lower prices have mostly been met," Bloomberg reported last week, citing people familiar with the matter. "But the scope of the recent requests are unusual and leaves manufacturers weighing whether to absorb the costs to maintain a longer-term business relationship."

💭 Nathan's thought bubble: Walmart is playing with fire but retains a degree of leverage because it's such an enormous buyer and because it can source more products from other countries if Chinese suppliers don't cooperate.

The President re-truthed a story with a thumbnail image of the symbol used by the Nazis to target gay people in concentration camps.

Emergency services were called to the university on Wednesday evening after green flames were seen erupting from a manhole cover.

Poland's President Andrzej Duda said NATO should shift its defense infrastructure eastwards.

• Ukraine is on the verge of losing its final town in Kursk, the Russian region it invaded in August.
• Moscow has pushed hard into Kursk in recent weeks, and Putin just visited the region himself.
• Kyiv's loss of its northern pocket comes as the US seeks to get Russia to accept a temporary cease-fire.

Eight months after launching its surprise attack on Russian soil, Ukraine's foothold in Kursk appears to be on its last legs.

As of Wednesday, the town of Sudzha — about five miles from Ukraine's border — remains Kyiv's final significant position in the Russian region.

Ukrainian officials have been painting a bleak picture of its defense.

Roman Kostenko, the secretary of the defense committee in Ukraine's parliament, told local reporters in a Wednesday briefing that Russian troops have entered the town and are trying to cut off Ukrainian supply lines.

"There is information that the Russians have entered a certain part. Fighting continues. The Russians control a certain area there, which is across the river," Kostenko said.

Still, he added that he hadn't received word of a full withdrawal, a decision that Kyiv has also not confirmed.

But the language used by Ukraine's top officials indicates that at least a partial pullback is already underway.

Ukraine's chief commander, Oleksandr Syrskyi, said on Wednesday evening that he had ordered Ukrainian troops to move to "more advantageous lines" if necessary.

Sudzha has been "almost completely destroyed" by Russian air strikes, Syrski added.

Both he and Ukrainian President Volodymyr Zelenskyy have said Kyiv's priority in Kursk now is to "preserve the lives" of Ukrainian troops.

"The Russians are applying maximum pressure on our soldiers," Zelenskyy told reporters on Wednesday.

Meanwhile, Russian military bloggers have been posting footage of the fighting in Sudzha, appearing to show Moscow's advance reaching the town's administrative buildings.

The Kremlin's push comes as Russian leader Vladimir Putin visited Kursk for the first time since Ukraine breached the region.

Dressed in military fatigues, he told his troops on Wednesday to clear out the remnants of Ukraine's troops in Kursk, according to state media.

With Ukraine's position in Kursk now dire, it's ousted Dmytro Krasylnykov, the commander of its northern operations.

National broadcaster Suspilne reported that Krasylnikov said an order for his replacement was signed on March 7. Oleksiy Shandar, who was deputy commander of Ukraine's airborne assault forces, is set to take over.

An advantage held for months, now on the verge of collapse

Ukraine launched its surprise Kursk offensive in early August, widely interpreted as a bold effort to both draw Russian resources away from the hard-hit eastern front and to create a bargaining chip for cease-fire negotiations.

Within days, Kyiv's forces seized some 500 square miles of Russian territory and threatened to encroach upon Kursk city itself.

But Moscow's troops rushed to contain the advance, eventually cutting down Ukraine's pocket there to just the land around Sudzha.

If the Kremlin fully retakes Kursk, it would come as President Donald Trump's administration tries to get Russia to accept a temporary cease-fire, which Ukraine has already agreed to.

"We'll take this offer now to the Russians, and we hope that they'll say yes, that they'll say yes to peace," Secretary of State Marco Rubio said on Tuesday. "The ball is now in their court."

Earlier this month, tensions with Washington also prompted the US to roll back some of its intel and weapons support for Ukraine. Shortly after the decision was made, officials in Kyiv told Business Insider's Jake Epstein that the loss of intel hampered Ukraine's ability to defend against Russian missile attacks.

The Washington Post also reported that the move had prevented Ukraine from precisely targeting Russian positions with advanced American artillery systems.

After Kyiv accepted the cease-fire terms, the US said on Monday that it had resumed sharing intel with Ukraine.

• Michelle Obama says her husband Barack Obama's punctuality used to get on her nerves.
• "Barack, you know, he had to adjust to what 'on time' was for me," Obama said on her "IMO" podcast.
• The former first lady previously said she had a bad impression of him when he was late for their first meeting.

Marriage isn't easy — even Michelle Obama used to have a major pet peeve with her husband Barack Obama.

During Wednesday's premiere episode of her podcast "IMO," which she cohosts with her brother Craig Robinson, the former first lady spoke about one of her husband's habits that used to get on her nerves.

"Barack, you know, he had to adjust to what 'on time' was for me," Obama told Robinson.

"Because he was on that island time," Robinson interjected, referring to the former president's Hawaiian roots.

Obama said it bothered her that her husband would often only start getting ready when it was time to leave for their appointments.

"You know, I've got this husband who's like, when it's time to leave, it's 3, he's getting up and going to the bathroom. And I was like, dude, dude, a 3 o'clock departure means you've done all that, you know? It's like, don't start looking for your glasses, you know, at the 3 o'clock departure," she said.

However, he tries to keep himself in check these days, she said.

"But he's improved over 30 years of marriage," she said. She added that her daughters, Malia and Sasha, know to be early if they are doing anything with her.

In 2014, using public data posted on the White House website, The Washington Post reported that the former president was over 35 hours late to his scheduled engagements that year.

In a 2018 interview, Obama shared that she had a bad impression of Barack Obama when they met at a Chicago law firm in 1989 because he was late for their first meeting.

"I was like, is he trifling? The black man's going to be late on the first day? I was like, 'Um,'" Obama told ABC News' Robin Roberts.

Punctuality is often touted as a key to success.

One such business leader who believes in punctuality is Richard Branson, the founder of Virgin Group.

"If you want to be more productive, then start at the start: get there on time," Branson wrote on LinkedIn in 2015. Not only is it a show of respect to others, it is also a way to effectively manage his day, he said.

"Of course, everything doesn't always go to plan. It isn't always possible to be on time, but it is always possible to try. When I find myself running late, I will often quite literally resort to running," Branson wrote.

Representatives for the Obamas did not immediately respond to a request for comment sent outside regular hours.

Former Philippine President Rodrigo Duterte is now in the custody of the International Criminal Court following his arrest in Manila in connection with his deadly war on drugs during his presidency, the ICC confirmed Wednesday.

The big picture: The ICC Office of the Prosecutor alleged in a statement "there are reasonable grounds to believe that Mr Duterte bears criminal responsibility for the crime against humanity of murder" for the drugs crackdown.

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• The ICC began its investigation in 2021 after thousands of people were killed in police drug operations in the Philippines.

Zoom in: Duterte is alleged to have committed the crimes from November 2011 through March 2019 "as part of a widespread and systematic attack directed against the civilian population," per the statement.

• The Office of the Prosecutor alleges that Duterte, as founder and head of the "Davao Death Squad," then mayor of Davao City and subsequently as the president of the Philippines, "is criminally responsible for the crime against humanity."
• The Office of the Prosecutor called the transfer of Duterte to the Netherlands, where he could face trial in the Hague, "a crucial step in our continuous work to ensure accountability for the victims of the most serious crimes under ICC jurisdiction."

What they're saying: Sara Duterte, the elder daughter of the former Philippines' and current vice president of the Southeast Asian nation, in a media statement called his being taken to the Hague following his arrest Tuesday "oppression and persecution."

What's next: The office is making preparations toward Duterte's initial appearance and subsequent judicial proceedings that will determine whether he stands trial.

Flashback: "I assume full responsibility," Duterte says of drug war

Stuck on today's "Wordle" brainteaser? Newsweek has provided all the help you need to maintain, or start, your winning streak.

Perplexed by today's "Connections" word puzzle game? Have no fear, Newsweek has all the clues you need.

A Texas megachurch founder and former spiritual adviser to President Trump was indicted in Oklahoma Wednesday for alleged child sexual abuse crimes dating back to the 1980s.

The big picture: Robert Preston Morris, 63, who founded the Gateway Church in the Dallas suburb of Southlake, faces five counts of lewd or indecent acts with a child, according to the indictment.

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Details: Morris is accused of committing the offenses on a girl from when she was 12 until she was 14.

• Prosecutors allege the offenses began in December 1982 when Morris was a traveling evangelist visiting the accuser's family in Hominy, Okla., and continued for the next four years, per a statement from the Oklahoma Attorney General's Office.
• An attorney for Morris, who resigned from his role as senior pastor last June following child molestation allegations, declined to comment to local media.

Zoom out: Morris founded the Gateway Church in 2000 and it now has an estimated 100,000 attendees.

• Trump appointed Morris to his evangelical advisory committee and named him as a spiritual adviser in 2016 when the Republican leader was a presidential candidate.
• Morris hosted Trump at Gateway Church during a 2020 roundtable event. A spokesperson for Trump emphasized to the New York Times after the allegations emerged last year that the pastor had no role in his re-election campaign.

What they're saying: "There can be no tolerance for those who sexually prey on children," said Oklahoma Attorney General Gentner Drummond in a statement. "This case is all the more despicable because the alleged perpetrator was a pastor who exploited his position.

• A Gateway Church spokesperson said in a media statement it's "aware of the actions being taken by the legal authorities in Oklahoma and are grateful for the work of the justice system in holding abusers accountable for their actions."
• It added the church was continuing to pray for Morris' accuser "and her family, for the members and staff of Gateway Church, and for all of those impacted by this terrible situation."

Go deeper: Southlake and Argyle churches seek new pastors

• A federal judge ordered Elon Musk and DOGE to produce records and answer questions about their work.
• Musk and DOGE have been given three weeks to comply with the order.
• Musk's government efficiency commission has been hit with nearly two dozen lawsuits.

A federal judge ordered Elon Musk and the Department of Government Efficiency, or DOGE, to hand over documents and answer questions about their plans to trim federal agencies.

US District Judge Tanya Chutkan said in her order on Wednesday that Musk and DOGE have to comply with the discovery request in three weeks.

Under the order, Musk and DOGE must turn over records relating to their plans to cull federal agencies, terminate federal employees, and cancel federal contracts. The discovery requests do not apply to President Donald Trump, who signed an executive order establishing DOGE on January 20, the day he took office.

Last month, 14 Democratic state attorneys general filed a federal lawsuit against Trump, Musk, and DOGE. In their lawsuit, the attorneys general asked the court to "restore constitutional order" and stop Musk "from issuing orders to any person in the Executive Branch outside of DOGE."

"Mr. Musk does not occupy an office of the United States and has not had his nomination for an office confirmed by the Senate. His officer-level actions are thus unconstitutional," the lawsuit argued.

Chutkan denied that request in a ruling issued on February 18, writing that she could not issue a temporary restraining order against Musk and DOGE "without clear evidence of imminent, irreparable harm" to the states.

Nonetheless, Chutkan acknowledged in her ruling that the attorneys general did "legitimately call into question what appears to be the unchecked authority of an unelected individual and an entity that was not created by Congress and over which it has no oversight."

Musk and DOGE have been hit with nearly two dozen lawsuits since the start of Trump's second term. DOGE's attempts to slash spending by laying off thousands of federal workers and shuttering foreign aid programs have sparked fear and confusion across the government.

This isn't the first time Musk and DOGE have been ordered to turn over records of their work.

On Monday, District Judge Christopher Cooper ordered Musk and DOGE to release some of its records to comply with three Freedom of Information Act requests from a watchdog nonprofit.

In his ruling, Cooper wrote that DOGE was operating with "unusual secrecy" and the "public would be irreparably harmed by an indefinite delay" in responding to the FOIA requests.

When asked about Cooper's ruling, a spokesperson for the Department of Justice told Business Insider on Tuesday that Musk and DOGE "are saving historic amounts of taxpayer money from being spent on unserious bureaucratic pet projects."

"This Department has already been fighting in court to vigorously defend President Trump's agenda and will continue to do so, especially when it comes to waste, fraud, and abuse of taxpayer dollars," the spokesperson added.

Representatives for DOGE and the DOJ did not respond to requests for comment from BI.