BuzzFeed lays off a third of its workforce, and AI was not the solution.
BuzzFeed placed its hopes on AI for a comeback. This week, it terminated another third of its workforce. Ultimately, this gamble did not prove to be the solution it needed.
The company laid off approximately 180 employees on Monday, making up about a third of its remaining staff, as reported by the New York Times. The layoffs impacted the news site HuffPost, the recipe brand Tasty, and BuzzFeed’s film and television studio.
These cuts mark the first significant action by Byron Allen, who acquired a controlling interest in May and assumed the role of chief executive.
This is a cost-cutting measure, not a robot takeover. It's easy to interpret this as AI displacing writers. However, the reality is more straightforward and grim. Allen took over a company burdened with debt, one that had cautioned investors about the potential for halting operations.
He is now implementing cuts to curb losses. BuzzFeed anticipates around $32 million in annual savings from the layoffs, according to the Hollywood Reporter, and its ad revenue declined nearly 20% year over year. This reflects old-fashioned cost-cutting within a declining company, rather than a story of automation.
The AI strategy that failed to deliver. The AI investment is genuine, but it hasn’t succeeded. Founder Jonah Peretti fully committed in early 2023 by announcing BuzzFeed would utilize ChatGPT for its quizzes, as noted by Futurism. The stock saw a temporary increase.
However, the company later faced criticism for publishing AI-generated articles filled with mistakes and shut down its Pulitzer-winning news division that same year. Website traffic plummeted, and the stock price dropped from around $4 to less than 50 cents.
Peretti has since stepped down as chief executive to focus on a new AI unit, pursuing projects like "BF Island."
Now, AI poses a threat as well. Ironically, the very technology BuzzFeed is investing in is pressuring the entire industry. AI systems utilize publishers' content to provide direct answers to queries, subsequently diminishing the traffic that funds that content.
Publishers are pushing back and seeking streaming agreements to connect with audiences that traditional platforms no longer provide.
The true challenge for BuzzFeed has always been in distribution. Facebook propelled its growth over the last decade, only to stop directing readers to it. Its reliance on uncontrollable platforms has been both the catalyst for its rise and the cause of its decline. This dependency involved social media feeds a decade ago, and now it extends to terms dictated by tech giants.
The AI turnaround was a gamble on having different outcomes this time. So far, it hasn't worked out.
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BuzzFeed lays off a third of its workforce, and AI was not the solution.
BuzzFeed eliminated approximately 180 positions, which is a third of its workforce, during owner Byron Allen’s initial major layoffs. Its investment in AI has not stopped the downward trend.