Global media and tech company Yahoo is to downsize its workforce by 20% which is about 1,600 employees as it plans to carry out a major restructuring of its ad tech unit.
The company’s CEO Jim Lanzone in an interview disclosed that the proposed layoffs are not a result of financial challenges, but rather, strategic changes to the company’s advertising business, which is not profitable.
He further stated that these changes will be tremendously beneficial for the overall profitability of Yahoo, noting that it will help the company to go on offense and invest more in profitable businesses. Also, he added that laid-off employees will be considered for other roles at the company.
A spokesperson at the company said, “The strategy of our ads business was to compete in the ad tech industry by offering a unified stock consisting of our Demand-side platform (DSP), Supply-side platform (SSP), and native platforms. 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.”
Investors King understands that Yahoo’s current restructuring will create a new division called “Yahoo Advertising”, which will focus advertising sales teams on the company’s properties, including Yahoo Finance, Yahoo Sports, and Yahoo news.
The total number of layoffs would amount to more than 50 percent of the ad tech unit’s current staff, and more than 20 percent of Yahoo’s current staff.
Founded in 1994 by Jerry Yang and David Filo, Yahoo provides users with information online utilities and access to other websites. The company is the latest company to join a growing list of tech companies that have paid off a significant amount of their workforce amid global economic conditions.
Companies such as Dell, Amazon, Meta, Alphabet, Spotify, Paypal, Twitter, etc have all trimmed their workforce to navigate the current economic downturn.