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 to Yahoo Advertising. This division will focus on deals with Fortune 500 companies.

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

TechCrunch has reached out to Yahoo for comment.

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