Yahoo plans to lay off over 20% of its 8,600 workforce as part of a major restructuring effort. The company is reorganizing its advertising unit, which will lose over half of its employees by the end of the year. Nearly 1,000 employees will be affected by the cuts by the end of the week.
The layoffs are part of Yahoo's effort to streamline its advertising unit operations. This comes as many advertisers have reduced their marketing budgets due to record-high inflation rates and uncertainty about a possible recession. The re-focus signals the company's intention to stop competing directly against companies like Google and Facebook in the digital advertising space. The new division will be called Yahoo Advertising. The company will prioritize support for its top global customers and re-launch dedicated ad sales teams towards its owned and operated properties, including Yahoo Finance, Yahoo News, Yahoo Sports, and more.
Why are big tech companies cutting jobs?
The big tech companies are cutting jobs due to a downturn in demand, high inflation, and rising interest rates. They are trying to balance cost-cutting measures with the need to remain competitive as consumer and corporate spending shrink. Job cuts in the US hit a more than two-year high in January, with the technology industry cutting jobs at the second-highest pace on record. Companies like Google, Amazon, and Meta are also facing job cuts.
Is this a warning for the wider economy?
The job cuts in the tech industry could be a warning for the wider economy, as the technology industry was once a reliable source of employment. Companies like Meta, Twitter, and Yahoo are cutting jobs to brace for a possible recession. The recent job cuts have been described as "the most difficult changes" by Meta's CEO, Mark Zuckerberg.
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