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Klarna aims to extend artificial intelligence-driven cuts to its workforce with plans to axe almost half of its staff, as the lossmaking Swedish buy now, pay later company gears up for a stock market flotation.
From: Klarna aims to halve workforce with AI-driven gains.
A year later
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“We just had an epiphany: in a world of AI nothing will be as valuable as humans,” Klarna CEO Sebastian Siemiatkowski said earlier this year. He added that the company would start working toward being “the best at offering a human to speak to.”
From: Klarna Reassigns Workers to Customer Support After AI Quality Concerns – Business Insider.
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Block is doing a very aggressive head‑count reset and using “AI” as both a real lever and a narrative to justify it, rather than simply running a small pilot like Klarna did.
## What Block is actually doing
– Block is cutting around 40% of its workforce (roughly 4,000 people, from a bit over 10,000 down to just under 6,000). [cnn](https://www.cnn.com/2026/02/26/business/block-layoffs-ai-jack-dorsey)
– Jack Dorsey has explicitly framed this as shifting to “significantly smaller teams” using internal “intelligence tools” (AI) to automate work across Square, Cash App, etc., and says the tools are improving week by week. [apnews](https://apnews.com/article/block-dorsey-layoffs-ai-jobs-18e00a0b278977b0a87893f55e3db7bb)
– Financially this is framed as efficiency, not distress: gross profit is growing, and the stock jumped ~20–25% on the announcement as investors priced in higher margins. [forbes](https://www.forbes.com/sites/digital-assets/2026/02/27/jack-dorsey-bets-blocks-future-on-ai-cuts-nearly-half-its-workforce/)
So operationally: this is a deliberate restructure to a much leaner org that leans heavily on AI plus a big “we over‑hired in 2020–2023” correction. [joshbersin](https://joshbersin.com/2026/03/is-blocks-decision-to-layoff-40-of-its-workforce-a-bellwether-or-not/)
## Is this “just marketing”?
It’s not *just* marketing, but the AI story is doing important political and investor work:
– There’s a clear non‑AI driver: Block more than doubled/tripled headcount since 2019 while its share price fell sharply; now they’re unwinding that expansion and unifying duplicated orgs (Square vs Cash App). [forbes](https://www.forbes.com/sites/ronshevlin/2026/02/27/block-lays-off-40-of-staff-and-blames-it-on-ai-dont-buy-the-excuse/)
– Executives and investor notes repeatedly stress AI as the reason they can run with far fewer people, but outside analysts have pointed out that “AI” is also a convenient label for a classic cost‑cutting / de‑bloating exercise and to win credit as an “AI‑efficient” company. [finance.yahoo](https://finance.yahoo.com/video/ai-bloat-real-reason-behind-155649160.html)
So: there *is* genuine AI automation and a real shift to smaller teams using in‑house tools, but the scale and timing of the cuts also reflect over‑hiring and pressure to improve profitability; AI is the story that makes that palatable and boosts the multiple.
## How this differs from Klarna
– Klarna’s much‑publicised “We replaced X people with AI” episode ended up more like a specific function (customer service / support) where they later had to add or rebalance staff as the practical limits of automation became clear. Commentary around Block is already more cautious, suggesting 40% permanent AI‑driven reduction is unlikely to be clean or linear. [finance.yahoo](https://finance.yahoo.com/news/block-layoffs-reveal-dark-side-135500189.html)
– Analysts looking at Block are explicitly warning not to treat this as a pure AI miracle but as a signal of:
– correcting previous bloat,
– using AI to *justify* faster, deeper cuts than they could have sold otherwise,
– and testing how far they can push AI‑enabled “small core team” models before customer experience or compliance suffer. [forbes](https://www.forbes.com/sites/digital-assets/2026/02/27/jack-dorsey-bets-blocks-future-on-ai-cuts-nearly-half-its-workforce/)
In other words: Block is genuinely reorganising around AI, but the “we’re cutting 40% *because of AI*” line is at least as much about investor relations and narrative control as about actual present‑day AI capabilities.
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Block is the most vivid recent example. Dorsey laid off over 4,000 people (nearly half the company) from a business he described as “strong”, with gross profit growing at 26% year-on-year. His stated rationale: AI tools mean smaller teams can outperform larger ones, and this trend is compounding weekly. He predicted most companies would reach the same conclusion within a year. The stock jumped 17%.
But Dorsey’s own former head of communications, Aaron Zamost, argued in the New York Times that the cuts look more like standard corporate downsizing dressed up in an AI narrative. Look at the specifics, Zamost suggested (cuts to the policy team, elimination of diversity roles) and it reads like prioritisation and cost management, not AI-driven reinvention. Block had already tripled its headcount during the pandemic and run multiple rounds of layoffs before this one. Even Dorsey admitted he’d over-hired during COVID.
From: Digital Economy Dispatch #276 — Lies…Damn Lies…And AI.
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But What About Productivity?
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Snippings 