Yahoo is not getting out of the ad-tech business, but it is laying off more than 20% of its workforce. The move is part of a major restructuring of its ad-tech unit.

The cuts will impact more than 50% of Yahoo’s ad-tech employees — more than 1,600 people, executives told Axios. 

Yahoo CEO Jim Lanzone said in an interview with Axios that the layoffs are not a result of economic issues, but are due to intentional changes to strengthen Yahoo’s advertising business unit.

As a whole, Yahoo is profitable, earning around $8 billion in yearly revenue.

In November, the company took a large stake in advertising network Taboola.

The 25% stake puts the two companies in a 30-year commercial agreement.

Lanzone told Axios the changes will allow Yahoo to increase competition for advertising placements eight times over, but as a result of this transition, the company will shut down its native advertising platforms including Gemini and its supply-side platform (SSP).

Yahoo will now focus on its demand-side platform (DSP), which will be renamed Yahoo Advertising. Deals with Fortune 500 companies now will become the division’s focus.

The company will shutter the SSP business rather than selling it because it wants to avoid being locked into a post-sale agreement where it would be forced to use its SSP exclusively, Lanzone said. He told Axios that working with many different SSPs will help Yahoo optimize its ad revenue.

Yahoo and AOL were acquired by global private-equity firm Apollo for $5 billion from Verizon in 2021. Apollo renamed the joint company Yahoo and hired Lanzone to run the business.

Yahoo’s brand-name equity still remains strong. Founded by Jerry Yang and and David Filo in 1994, Yahoo was an early pioneering internet company. The name is synonymous with web, search, email and other media content services such as news, finance, and sports.

The group initially focused on native advertising, and built out a business to support guaranteed programmatic. The company also partnered with Microsoft Bing to serve search ads across its search engine. 

Now the question remains, will Yahoo acquire Taboola as it moves forward and changes its business model.

Yahoo isn’t getting out of the ad-tech business, but the company will lay off more than 20% of its workforce.