Klarna, Europe’s biggest buy-now-pay-later (BNPL) platform, has garnered headlines and controversy with its recent admission of using AI to reduce its corporate headcount.
Interviewed by CNBC Business, Klarna CEO, Sebastian Siemiatkowski, recounted how the Stockholm Fintech had reduced its corporate workforce by “nearly 40% over the past two-years” driven by the deployment of artificial intelligence utilities.
A two-year process saw Klarna shrink its workforce from over 5,500 employees at the end of 2022 to around 3,000 in 2025. Siemiatkowski attributed the downsizing to a combination of halted hiring and natural attrition, combined with an increased reliance on artificial intelligence.
Moving forward, Klarna has told employees of its intent to reduce headcount without layoffs, relying instead on people leaving voluntarily over time. “If you go to LinkedIn and look at the jobs, you’ll see how we’re shrinking,” he said.
The change, Siemiatkowski said, stems from Klarna’s increasing dependence on artificial intelligence.
In 2023, the firm partnered with OpenAI to develop tools designed to automate customer services and streamline back-office operations. One of its flagship deployments, an AI-powered chatbot, now handles the workload previously managed by around 700 human agents.
Last year, the company even used a digital avatar of Siemiatkowski to present its third-quarter results, a symbolic gesture designed to highlight the growing role of automation within the business.
Replacing people with platforms
The move has not been without controversy. Labour organisations in Sweden have previously voiced concern over Klarna’s growing use of technology to replace workers and its willingness to experiment with loose employment models.
Klarna recently acknowledged that its shift to AI-only customer service led to a decline in quality, prompting it to bring back human agents, but not as full-time employees.
Instead, leadership is trialling a “gig-style” approach to customer service. Workers log in remotely and accept queries on an on-demand basis, without the guarantees of permanent contracts or traditional workplace protections.
While the approach offers management flexibility, critics argue it mimics the worst excesses of the gig economy, reducing job security and shifting financial risk onto individual workers on insecure contracts.
The criticism echoes wider concerns about the platform model popularised by companies like Uber and Deliveroo. These firms have long faced accusations of eroding employment rights, and Klarna’s adoption of similar practices has drawn sharp criticism from European labour unions and digital rights campaigners – a scenario Klarna seeks to avoid as a European tech darling.
As discontent brews in Europe, Klarna’s gaze is turning towards the US. The firm filed for an initial public offering (IPO) earlier this year, hoping to list on the New York Stock Exchange under the ticker “KLAR”. The IPO was initially planned for early 2025 but was delayed after market instability triggered by President Trump’s tariff announcements.
Nonetheless, Klarna remains committed to a public debut later this year. It is understood to be targeting a valuation of around $15bn—well below the $45.6bn peak it reached in 2021, but a notable recovery from its post-downturn low of $6.7bn in 2022.
Siemiatkowski has argued that listing in the US, rather than Europe, offers Klarna the best chance to grow. “The US market gives us scale and access to investors who understand global technology platforms,” he said, noting that the firm had also returned to profitability with a $21m surplus recorded in 2024.
But Klarna’s restructuring arrives at a time of growing concern over the social impact of artificial intelligence. The European Union is in the process of finalising its landmark AI Act, which will introduce new rules governing transparency, safety, and accountability in AI systems.
While labour protections are not a central component of the legislation, some MEPs have called for future updates to address the growing use of AI in managing and replacing human workers.
The EC has also hinted at further regulatory efforts to protect gig workers and limit the reach of algorithmic management tools under the forthcoming AI Act. If adopted, these reforms could force companies like Klarna to rethink their reliance on AI and flexible staffing models.
For now, Klarna continues to present itself as a lean, technology-led company preparing for life on Wall Street. But behind the numbers, the backlash over its treatment of workers shows no signs of fading, especially as Europe begins to grapple with the labour consequences of automation.
