Job losses to begin at Yahoo with 1,600 staff set to lose their positions, in latest tranche of layoffs impacting tech sector
Tech veteran Yahoo is to cut a sizeable portion of its workforce in the coming year, with most of the job losses coming by the end of next week.
Yahoo executives first told Axios that the firm plans to lay off more than 20 percent of its total workforce (thought to be 10,000) as part of a major restructuring of its ad tech unit.
The cuts will reportedly impact more than 50 percent of Yahoo’s ad tech employees – more than 1,600 people.
Besides the obvious bad news for Yahoo staffers, the redundancies are notable as it signals Yahoo’s intention to stop competing directly against the likes of Google and Facebook’s Meta for digital advertising dominance.
Yahoo CEO Jim Lanzone told Axios in an interview that these changes will be “tremendously beneficial for the profitability of Yahoo overall,” and will allow the company “to go on offense” and invest more in other parts of its business that are profitable.
The firm has gone though some changes in the past few years. Verizon had acquired AOL or $4.4 billion back in 2015.
Verizon then acquired Yahoo’s internet business in 2016 for $4.83bn, which meant Verizon had spent a total of $9.2 billion acquiring the two assets.
But in May 2021 it was revealed that AOL and Yahoo (collectively then known as Verizon Media) was to be sold to private equity firm Apollo Global for just $5 billion, ending an expensive run in the media and advertising world for Verizon Communications.
But the new reality facing Yahoo in early 2023 is that many advertisers have pared back their marketing budgets in response to high inflation rates and continued uncertainty about a global recession.
The layoffs are part of a broader effort by the company to streamline operations in Yahoo’s advertising unit.
The Yahoo for Business segment’s strategy had “struggled to live up to our high standards across the entire stack,” a Yahoo spokesperson was quoted as saying by CNBC.
“Given the new focus of the new Yahoo Advertising group, we will reduce the workforce of the former Yahoo for Business division by nearly 50 percent by the end of 2023,” a Yahoo spokesperson told CNBC.
Yahoo reportedly said the company would shift efforts to its 30-year partnership with Taboola, a digital advertising company, to satisfy ad services.
“These decisions are never easy, but we believe these changes will simplify and strengthen our advertising business for the long run, while enabling Yahoo to deliver better value to our customers and partners,” the Yahoo spokesperson said.
A Yahoo spokesperson told CNBC that the company would provide severance packages to domestic employees who had lost their jobs. Yahoo didn’t provide specific details on the size or value of the severance packages.