Yahoo is laying off 20% of its staff, impacting 1,600 employees in its ad tech business. Yahoo is the parent company to TechCrunch.

Employees were notified on Thursday that 12% of the company (1,000 employees) 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 impact around half of Yahoo’s ad tech business.

In an interview with Axios, Yahoo CEO Jim Lanzone said that these layoffs are not a result of economic issues, but rather, they are intentional changes to strengthen the unprofitable Yahoo for Business advertising unit. As a whole, Yahoo is profitable, earning around $8 billion in yearly revenue.

In November, Yahoo took an almost 25% stake in advertising network Taboola, which is now the company’s native advertising partner in a 30-year commercial agreement. Lanzone told Axios that these changes will allow Yahoo to increase competition for ad placements eight times over — but as a result of this transition, Yahoo will shut down native advertising platforms like 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.

“Over several years, the strategy of our ads business was to compete in the ad tech industry by offering a ‘unified stack’ consisting of our Demand Side Platform (DSP), Supply Side Platform (SSP) and Native platforms,” a Yahoo spokesperson said in a statement to TechCrunch. “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.”

In 2021, private equity firm Apollo Global Management completed its $5 billion acquisition of Yahoo, which was formerly known as Verizon Media group.

Update, 2/9/23, 3:05 p.m. ET with comment from Yahoo.

Source @TechCrunch