Yahoo is laying off 20% of its workforce, affecting 1,600 employees in its ad tech business. Yahoo is the parent company of TechCrunch.
Employees were informed on Thursday that 12% of the company (1,000 workers) would be laid off before the end of the day. In six months, another 8%—or 600 people—will be let go. These cuts will affect about half of Yahoo’s ad technology business.
In an interview with Axios, Yahoo CEO Jim Lanzon said that these layoffs are not the result of economic issues, rather, they are deliberate changes to consolidate the unprofitable Yahoo for Business advertising unit. Overall, Yahoo is profitable, earning approximately $8 billion in annual revenue.
In November, Yahoo took a roughly 25% stake in ad network Taboola, which is now the company’s original advertising partner, in a 30-year commercial agreement. Lanzon told Axios that these changes would allow Yahoo to increase the competition for ad placements by as much as eightfold – but as a result of this change, Yahoo would shut down native advertising platforms such as Gemini and its supply-side platform (SSP). Yahoo will also focus on its demand-side platform (DSP), which will be renamed Yahoo Advertising. This division will focus on deals with Fortune 500 companies.
A Yahoo spokesperson said, “Over many years, the strategy for our advertising business was to compete in the ad tech industry by offering an ‘integrated stack’ consisting of our Demand Side Platform (DSP), Supply Side Platform (SSP) and Native Platform. ” said in a statement to TechCrunch. “Despite many years of effort and investment, this strategy was not profitable and the entire stack struggled to live up to our high standards.”
In 2021, private equity firm Apollo Global Management completed its $5 billion acquisition of Yahoo, formerly known as Verizon Media Group.
Update, 2/9/23, 3:05 PM ET with comment from Yahoo.