Yahoo announced on Thursday that it will lay off more than 20% of its staff by the end of the year, including cutting 1,000 positions this week. The company is seeking to streamline operations in its advertising unit, which has not been profitable.

In an interview with Axios, Yahoo CEO Jim Lanzone said that the company is seeking to prioritize other areas. Lanzone added 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.  Yahoo will shut down its advertising business and instead focus on its new partnership with Taboola to sell native advertising, said Lanzone. A Yahoo spokesperson added: “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.”

In 2021, private-equity firm Apollo acquired Yahoo and AOL for $5 billion. In November 2022, Yahoo took an almost 25% stake in Taboola in a 30-year commercial agreement.  A Yahoo spokesperson said in a statement:  “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. 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.”

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