Snapchat parent company Snap Inc (NYSE: SNAP) (ETR: 1SI) is laying off about 1,000 workers and scrapping more than 300 open roles. The cuts represent 16 per cent of the company’s full-time workforce.
Chief Executive Officer Evan Spiegel announced the changes on Apr. 15. He points directly to rapid AI advancements as the driver.
AI now generates more than 65 per cent of new code at Snap and powers agents that handle support questions and bug detection. These tools let smaller teams complete work once done by larger groups.
The company expects the moves to slash its annualized cost base by more than US$500 million by the second half of 2026 and steer it toward net-income profitability. Snap also faces pressure from activist investor Irenic Capital Management to shrink head count and embrace AI more aggressively, as reported by Reuters.
“I think AI is the greatest thing that has ever happened to Snapchat,” said Spiegel in an interview on Apr. 12. “It’s changing the way everything gets done.”
Perplexity deal falls through
The layoffs come after the collapse of a planned partnership with AI search startup Perplexity valued at US$400 million.
Under the agreement announced in late 2025, Perplexity would have paid Snap a mix of cash and equity to embed its conversational AI search directly into Snapchat’s chat interface. Rollout was targeted for early 2026 with meaningful revenue contributions expected this year.
The deal fell apart amid disagreements over terms and rollout details. Snap had already signalled delays in its February 2026 earnings call, noting that the companies had not mutually agreed on a path forward and that its guidance excluded any related revenue. By mid-April 2026, reports confirmed the partnership was dead.
Though Spiegel’s memo makes no direct reference to the failed deal, the timing and context imply a connection. Without the anticipated cash infusion and external AI capabilities, Snap faces a larger revenue gap and must lean harder on internal AI tools and cost reductions to maintain momentum toward profitability.
The missed opportunity adds pressure on the company to deliver efficiency gains through smaller teams and accelerated AI adoption, even as activist investors push for leaner operations.
Read more: Wool shoe producer Allbirds soars on unexpected AI pivot
AI prompts layoffs across tech sector
Snap joins a lengthening list of major firms that cite AI for workforce reductions.
In March 2026, Oracle Corp (NYSE: ORCL) (ETR: ORC) eliminated 20,000 to 30,000 positions while pouring resources into AI infrastructure. Additionally, Meta Platforms Inc (NASDAQ: META) cut 700 roles the same month and signalled plans to trim more than 20 per cent of staff so AI-assisted workers could cover the load.
Block Inc (NYSE: XYZ) slashed more than 4,000 jobs in February to build smaller, AI-integrated teams. This cut represents nearly half of its workforce. Another, Atlassian Corp (NASDAQ: TEAM) (FRA: 48D), also removed 1,600 employees, or 10 per cent, to fund further AI investment.
Experts note that while AI boosts productivity, companies often use it as convenient cover for broader cost-saving drives. Tech giants continue to shrink teams while they invest heavily in AI tools that promise faster output with fewer people.
Read more: YouTube bans Iranian channel over Lego-style AI vids critical of Trump
Follow Rowan Dunne on LinkedIn
rowan@mugglehead.com
