Website builder Wix to lay off 20% workforce
What's the story
Wix, the popular website building platform, is gearing up for a major restructuring. The company plans to lay off around 1,000 employees or nearly 20% of its global workforce in the coming months. Prior to these layoffs, Wix employed over 5,200 people globally with more than 60% based in Israel.
AI impact
Advancements in AI render some roles unnecessary
The layoffs are being attributed to the rise of artificial intelligence (AI) tools. According to The Times of Israel, Wix management has informed employees that human staff in development and design roles are no longer needed at the same scale due to advancements in AI. This highlights how rapidly technology is evolving and reshaping job markets across industries.
Strategic shift
Increased focus on AI-powered products and tools
The layoffs come as Wix invests heavily in AI-powered products and tools. The company acquired Israeli AI start-up Base44 for $80 million over the past year, and also bought start-up Hour One to bolster its web creation and generative AI video capabilities. Base44, which specializes in "vibe-coding" tools, is now generating an annual recurring revenue of $150 million.
Economic challenges
Financial pressures driving cost-cutting measures
Wix's decision to lay off employees comes after the company reported a first-quarter loss of $57.5 million, despite a 14% revenue growth to $541 million. The financial pressure was mainly due to a massive $1.7 billion share buyback program and rising compute costs related to AI infrastructure. As tech companies rush to build and integrate AI systems, many are under pressure to cut costs by eliminating what they deem redundant roles.
Controversy
Debate over AI's role in job cuts
The wave of AI-linked layoffs has sparked a debate over whether artificial intelligence is really replacing workers at the scale companies claim. OpenAI CEO Sam Altman recently hinted that some firms may be using AI as an excuse for layoffs that would have happened anyway. Adding to the uncertainty, an MIT study released last year found that 95% of corporate AI investments had generated "zero return" so far.