Yahoo says that it will lay off 20% of its workforce this year. Some 1,600 people will lose their jobs mainly those working in the advertising department.
Yahoo CEO Jim Lazone said the layoffs were not a result of financial difficulties but was more due to the lack of profitability in the company’s business advertising unit.
Lazone said that the total number of layoffs would amount to 50% of the advertising unit’s current staff and everyone would be let off by the end of 2023. Some 1,000 employees were retrenched on February 9.
Lazone said that the company layoffs and restructuring would be “tremendously beneficial for the profitability of Yahoo overall” and would allow the tech company to “go on the offense” and invest in parts of Yahoo that are profitable.
The layoffs mean that Yahoo is no longer trying to be a direct competitor to Google and Meta in the digital advertising segment.
In a statement made to TechCrunch, Yahoo said, “Despite many years of effort and investment, this strategy was not profitable and struggled to live up to our high standards across the entire stack.”
In 2021, Yahoo and AOL were acquired by Apollo, a global private equity firm for $5 billion. Although Yahoo has been helping digital publishers and companies sell automated ads against their content, this part of the business has not been profitable for them.
Axios reported that as part of the restructuring Yahoo will shut down its native advertising platform Gemini and in its place it will work with ad tech company Taboola in a new partnership that will see Yahoo sell advertising on its own content.
In the 90’s, Yahoo ruled the roost and was synonymous with the internet itself but in subsequent decades Google dominated the search and social media platforms like Facebook, Instagram and YouTube as online destinations.