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Yahoo has announced that about 1,000 of the 20 percent job cuts will be implemented by the end of this week.
Yahoo, an American web service provider, has announced plans to send home approximately 20 percent of its global workforce, representing more than 1,600 people. According to the announcement, Yahoo, which is 90 per cent owned by Apollo Global Management and 10 percent by Verizon Communications, will be restructuring its advertising business unit. As a result, more than 50 percent of the company’s ad unit employees will be affected by the lay-offs that will begin this week.
According to Yahoo CEO Jim Lanzone in a recent interview, the upcoming workforce lay-offs are not due to financial challenges, but rather, to restructure its ad business unit that has not been profitable for long. As a result, the company’s quest to compete with Alphabet Inc (NASDAQ: GOOGL) and Meta Platforms Inc (NASDAQ: META) in the advertisement industry will be suppressed significantly for now. As a result, the company’s 30-year partnership with Taboola.com (NASDAQ: TBLA) will be the sole driver of its advertising business.
“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 noted.
Yahoo has announced that about 1,000 of the 20 percent workforce cuts will be implemented by the end of this week. Without mentioning any details, the company indicated that the affected employees be provided with severance packages.
Yahoo Morphs with Changing Global Business Landscape
Founded during the early internet period in the 90s, Yahoo has grown to one of the respected global web service companies. However, competition has significantly increased from other internet service providers like Microsoft Corporation (NASDAQ: MSFT) which once offered to acquire Yahoo for about $44 billion.
Notably, this is not the first time that Yahoo has had to lay off a significant portion of its employees. On April 4, 2012, Yahoo announced 2,000 layoffs, representing about 14 percent of its 14,100 workers by the end of the year.
The changing global economies have pushed internet-related companies to morph with market needs. The Web3 market has gained significant traction following its ability to tap into emerging technologies like artificial intelligence (AI) and blockchain technology.
For instance, Alphabet launched an experimental AI service powered by Language Model for Dialogue Applications (LaMDA) dubbed Bard. As a result, Google anticipates outdoing its competitors including Microsoft which also launched a similar service for its search engine platform.
Nonetheless, the global advertising market has significantly shrunk compared to pre-Covid as shown by Twitter Inc’s financial revenue reports.