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Yahoo intends to lay off more than 20% of its staff as it changes the way it approaches its work in advertising technology.
Axios reported Thursday that the cuts are expected to impact more than 1,600 people at Yahoo, amounting to more than half of the company’s ad-tech staff.
A Yahoo spokesperson confirmed to MarketWatch that the company would be laying off more than 20% of its total workforce and said that almost 1,000 of the layoffs were set to occur this week.
While Yahoo had been trying to compete in the digital-ad world against Google parent Alphabet Inc.
GOOG,
GOOGL,
and Facebook parent Meta Platforms Inc.
META,
the cuts suggest the company is scaling back those ambitions.
Axios cited a conversation with Yahoo Chief Executive Jim Lanzone, who said that Yahoo was reducing staff in this unprofitable area of its business for strategic reasons, rather than because of broader financial challenges.
The cuts will be “tremendously beneficial for the profitability of Yahoo overall” because the company will be able to invest more money in profitable segments, Lanzone said, according to the Axios story.
Yahoo is “narrowing its focus” on its demand-side platform, with plans to “sunset” its supply-side platform, the Yahoo spokesperson said.
“We are transforming our ad tech division, Yahoo for Business, to set it up for long-term success,” the spokesperson continued. The unit that remains will be renamed Yahoo Advertising.
Apollo Funds purchased the Yahoo business from Verizon Communications Inc.
VZ,
in 2021.
Yahoo’s decision comes as businesses across the tech sector are making profitability a greater focus and scaling back on areas that aren’t core strengths. For example, buy-now-pay-later company Affirm Holdings Inc.
AFRM,
which announced plans to lay off 19% of its staff Wednesday, said it would also be “sunsetting” projects like a crypto initiative.
See more: More than 100,000 tech-sector employees have lost their jobs since the start of 2023
The lions of advertising technology, meanwhile, haven’t been immune to cutbacks of their own. Meta announced in November plans to eliminate 11,000 jobs, and the company’s newfound focus on efficiency is resonating on Wall Street. Google said in January that it planned to cut 12,000 jobs, but one hedge fund billionaire has argued that the move doesn’t go far enough to control costs.
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