Yahoo plans to lay off more than 20% of its total employees. This plan forms part of a major restructuring of its ad technology unit.
The cuts will affect nearly 50% of Yahoo's ad tech employees by the end of this year, with nearly 1,000 employees set to be furloughed this week, the company said.
"This decision is never easy, but we believe these changes will simplify and strengthen our advertising business over the long term, while allowing Yahoo to provide better value to our customers and partners," a Yahoo spokesperson said in a statement to Variety.
A Yahoo spokesperson told CNBC that the company will provide severance packages to employees who lose their jobs. Yahoo did not provide specific details about the size or value of the severance package.
The news that Yahoo has laid off 1,600 of its employees sticks out of the Axios report. However, Yahoo has not responded to this.
Quoted from CNN, Yahoo CEO Jim Lanzone told Axios in an interview that this change would greatly benefit Yahoo's overall profitability and would allow the company to invest more in other parts of its profitable business.
The announcement of Yahoo's layoffs comes as more technology and media companies are slashing costs to adapt to declining digital ad spending amid broader uncertainties in the global economy.
While Yahoo was synonymous with the internet during the 1990s, today it struggles to find relevance as Google dominates search and social media platforms such as Facebook, Instagram and YouTube.