Yahoo has announced its intention to cut its workforce by over 20% and eliminate a significant part of its advertising business. According to Axios, the company plans to lay off more than 1,600 employees as it exits from a part of its ad tech business that was responsible for helping digital media publishers.

As part of this move, Yahoo will shut down its supply-side platform, which helped digital publishers sell automated ads on their websites. The company will also shut down its Gemini ad platform. On the other hand, Yahoo has stated that it will keep its demand-side platform, which assists advertisers in buying ads across different websites.

These ad tech units were previously a part of AOL and an older version of Yahoo, both of which were acquired by Verizon in an attempt to compete with Google and Facebook. The wireless carrier merged both companies into a business known as Oath, with the aim of combining Verizon’s user data with AOL/Yahoo’s ad technologies to create a comprehensive platform for advertisers and publishers. However, this plan did not yield the desired results.

Yahoo is currently led by CEO Jim Lanzone, a media veteran with extensive experience in the industry. The company was purchased by private-equity firm Apollo in 2021 for $5 billion, far less than what Verizon had individually paid for AOL and the older version of Yahoo. With these cuts, Lanzone has stated that Yahoo will now have the ability to invest in other profitable parts of the business.

Yahoo’s decision to cut its workforce and exit from a significant part of its advertising business is a significant development in the company’s history. The move is aimed at streamlining operations and allowing the company to invest in other profitable areas. Despite these changes, Yahoo remains committed to its demand-side platform, which will continue to assist advertisers in buying ads across different websites.