Tech companies have been laying off employees left, right, and center in recent months to reduce operational costs as they suffer a decline in sales and income. Yahoo is the latest to announce a similar cost-cutting measure. The veteran tech firm will lay off about 20% of its global workforce, which is more than 1,600 people, over the next few months.
Yahoo’s mass layoff has already begun. The company let go of around 1,000 employees last week, which is roughly 12% of its global workforce. It will lay off another 600-odd people in the second half of the year. This mass layoff will affect Yahoo’s advertising business the most. Yahoo CEO Jim Lanzone told Axios that its ad tech unit will lose more than 50% of the current staff by the end of this year. The company will shut down some parts of its advertising business, including SSP (supply-side platform) and Gemini.
Lanzone added that Yahoo’s decision to reduce the workforce isn’t because of the current economic hardships. Instead, it is a strategic move to make the company’s ad business profitable. For the uninitiated, global private-equity firm Apollo acquired Yahoo and AOL from Verizon in 2021 and merged the two firms under the Yahoo brand to compete with Google and Meta in the digital ad space. The two firms had made more than 30 ad tech acquisitions over the years, so hopes were high.
However, Yahoo failed to live up to the expectations and kept losing money from the ad business. This failure has now prompted a mass layoff. “A lot of resources were going into that unified stack without a return,” Lanzone said. “This was a longstanding issue with every variation of this company … that needed to be solved eventually”. The Yahoo CEO added that the changes will be “tremendously beneficial” for the profitability of the company. It will be able to invest more in business areas that are already profitable.
Yahoo is the latest tech company to lay off employees
Yahoo isn’t the first tech company to announce a mass layoff and likely won’t be the last. Over the past year or so, dozens of other companies have collectively laid off more than 100,000 employees globally. These include 11,000 job cuts by Facebook Meta, 10,000 by Microsoft, 18,000 by Amazon, 12,000 employees by Google parent Alphabet, more than 5,000 by Twitter, 7,000 by Disney, 3,900 by IBM, 6,650 by Dell, 2,000 by PayPal, and many more. We may see more layoffs in the coming months if the current economic conditions don’t improve.