This analysis was first published in SvD Näringsliv, in Swedish, on September 7th, 2023. This piece was translated from Swedish by Claude. Some phrasing may differ from a human translation.
Spotify is happy to talk about how its platform reaches millions of people every day. But when SvD reveals it has been used for money laundering — the company declines an interview.
It was Spotify’s Capital Markets Day 2022, and CEO Daniel Ek opened to set the tone from the start. With stock analysts and retail investors in the audience, the star entrepreneur was going to try to convert a few skeptics.
“To begin with, we have an excellent product and our business is going very well. But beyond that, we are investing in building a fantastic, multi-sided platform with all the ingredients to become a truly unique, creative platform in the world.”
This is how it tends to sound when tech companies speak. Lots of talk about scalability and building platforms that enable others to express themselves. What they tend to talk less about is their responsibility for what goes on within those platforms.
SvD’s investigation shows that gang criminals have exploited Spotify for money laundering. When SvD contacts Spotify for an interview, the answer is no.
Companies having internal challenges is not something that requires a press release to the public. Money laundering, however, is a problem that affects far more people than just Spotify. It is a cornerstone of sustaining criminal operations over the long term.
It is therefore remarkable that the company avoids being interviewed about the platform it so readily promotes to the outside world in other contexts.
The situation is familiar. Meta, formerly Facebook, has found itself in similar positions on many occasions — including around the spread of misinformation. Tech companies’ approach follows a predictable pattern that tends to repeat itself when this type of issue arises.
Step 1: Create a platform that allows millions of people to use and participate in various ways. The number of users is so large that no manual oversight can be carried out to review them all.
Step 2: When problems of some kind arise — something that is often flagged from the outside — tech companies state that they have internal systems working to address them. But they are quick to add that the problem is so complex that an immediate and definitive solution is not available.
Step 3: If the problems continue, or are elevated politically, an internal review is launched and a tech executive comes out to say the company will do better and invest more. The issue disappears temporarily. Until the next — often very similar — problem arises again as a result of the large and ungovernable platforms.
What is missing from this cycle is tech companies’ recognition that these problems are self-created. It is not a given that an unlimited number of people should be able to freely use a platform without restriction. They are designed to have as little friction as possible for both new and existing users. The problems that arise become an acceptable side effect of tech companies’ demand for growth.
In Spotify’s case, concerns about money laundering were known internally. This is apparent from a report the company references when SvD requests an interview. At the same time, the streaming giant responds by email that it has no “evidence” that money laundering has occurred.
SvD’s reporting suggests the company is more reluctant to disable paid accounts used for fraud than free ones. Disabling premium accounts runs counter to Spotify’s entire strategy of building up that subscriber number.
Spotify disputes this characterization, writing that it “detects and addresses artificial behavior from both free and premium accounts.” What proportion of the disabled accounts belong to the latter category, the company declines to say.
There are many losers when fraud of this kind occurs. Spotify likely incurs high costs for staff and systems working to prevent it. Other artists — whose streams are genuine — receive a smaller share of revenues. Ordinary listeners look at the charts to get a sense of what is popular, without knowing the charts have been manipulated.
The situation is both messy and complex. One can have a degree of understanding for the difficulty of solving these issues quickly. But having a tricky self-created problem does not relieve Spotify of responsibility for managing a situation it made possible — even if unintentionally.
Money laundering is not a tech problem — it is a societal problem. The solution therefore does not need to come from Spotify alone. But more transparency about how it is contributing to the issue would be appropriate — for a player with so much power.
