In 2023, layoffs have become a common trend among tech companies as they focus on rejuvenation and restructuring. Major players like Google and Amazon have been letting go of thousands of employees unexpectedly, causing distress among their workforce. If you’ve been following recent news, you’re probably aware of this ongoing trend. If not, you can check it out for more information.
Layoffs are never an easy decision for any company and can have a significant impact on employees and their families. Companies often resort to layoffs as a cost-saving measure during economic difficulties or industry shifts. Tech giants like Google and Amazon have cited reasons such as predicted recessions and overstaffing due to pandemic hiring surges.
Following suit, Yahoo has announced plans to lay off 20% of its staff, amounting to 1,600 employees. The layoffs will primarily affect the ad tech division known as TechCrunch, which competes with Facebook and Google’s Meta. 12% of employees (1,000 individuals) will receive notifications by the end of Thursday, with the remaining 8% (600 employees) expected to be let go in the following six months.
Reasons Behind Yahoo’s Decision
In a surprising turn of events, Yahoo’s CEO, Jim Lanzone, clarified in an interview with Axios that the layoffs were not driven by economic challenges. Despite being a profitable company with an annual revenue exceeding 8 billion dollars, the restructuring aims to strengthen the unprofitable Yahoo for Business advertising unit.
Lanzone explained that their previous strategy aimed to establish a significant presence in the ad tech industry by offering a unified ad stack comprising Supply-Side Platforms (SSP), native platforms, and Demand-Side Platforms (DSP). However, this strategy proved to be unprofitable and failed to meet the company’s high standards across the entire ad stack.
The Restructuring Plan
Yahoo’s ad-tech division will now focus on partnerships with Fortune 500 companies. Recently, Yahoo partnered with Taboola, acquiring a 25% stake in the advertising network. Taboola now serves as Yahoo’s native advertising partner under a 30-year agreement. Yahoo intends to close down its supply-side platform (SSP) and native advertising platforms like Gemini. According to Lanzone, these changes will significantly increase Yahoo’s advertising competitiveness eightfold and beyond.
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