Yahoo, on Thursday, announced a plan of mass layoff, which would impact 20 per cent of its total workforce. This decision comes as part of a major reorganization of the company’s ad tech division as reported by Axios.

The layoffs will affect more than 50% of Yahoo's ad tech employees, which amounts to more than 1,600 people. Yahoo CEO Jim Lanzone said that the mass firings are not due to financial compulsion but rather tactical changes to the company’s business advertising unit, which will boost Yahoo’s overall profitability.

Yahoo’s decision marks an end of the company trying to compete with Google and Meta for digital advertising revenue. However, it remains a profitable concern with over 8 billion dollars in revenue.

Yahoo will pull down the shutters on a part of its advertising business on its supply-side platform, which facilitates in selling automated ads against content put out by digital publishers.

Gemini, Yahoo’s native advertising platform, will also be nixed. The company will look to leverage its newly-formed partnership with ad tech giant Taboola to sell native advertising on its own content instead.

The company will focus on its Demand-side platform (DSP), where advertisers will buy ads across different websites. More hirings and acquisitions will follow to strengthen Yahoo’s DSP Business.

The company will focus on catering to the advertising needs of Fortune 500 entities and other premium accounts. “The moves are meant to simplify and strengthen the good parts of the business, while sunsetting the rest,” Lanzone said, as per Axios.

In 2021, Yahoo and AOL were acquired by Apollo, a global private-equity firm, from Verizon for 5 billion dollars. The joint entity was named Yahoo with the aim of leveraging the data sets owned by the two companies to create a consolidated digital ad platform that could compete with Google or Meta.