Snap is making big changes, and artificial intelligence is at the center of it all. The company behind Snapchat plans to lay off about 1,000 employees. CEO Evan Spiegel shared the news in a memo to staff. The layoffs are part of a bigger push to restructure the company and lean heavily on AI.
A big reason for the shake-up is pressure from Irenic Capital, an activist investor. Irenic wants Snap to use AI to cut costs and boost its value by seven times. The firm also wants Snap to shut down its Specs hardware division, which has lost hundreds of millions of dollars without gaining much traction. The layoffs align with that goal by separating Snapchat’s main operations from the struggling Specs unit.
Irenic Capital is pushing Snap to leverage AI, slash costs, and shut down its money-losing Specs hardware division.
Snap’s stock jumped 13% after Irenic’s proposal went public. Investors seem to like the idea of using AI to replace workers and trim costs. Snap has said that small teams using AI tools have already made real progress. AI helped improve Snapchat Plus features, boosted ad platform performance, and made the company’s light infrastructure more efficient.
Snap also plans to use generative AI models to help remaining employees handle more work. Irenic’s proposal calls for replacing over 20% of Snap’s workforce with AI systems as part of its aggressive restructuring vision. The restructuring is expected to deliver annual savings of $500 million as the company looks to right-size after over-hiring during the pandemic.
Snap’s AI chatbot, called My AI, has already reached over 750 million monthly Snapchat users. More than 150 million people have sent 10 billion messages to My AI. That puts it among the largest consumer chatbots in the world. My AI helps users with travel and shopping ideas and supports advertisers through Snapchat Lifestyle Categories. The broader AI market is experiencing explosive growth, with the healthcare AI market alone projected to surge from $11 billion to $187 billion by 2030, reflecting how deeply AI is reshaping industries across the board.
Snap also uses public content from Spotlight, Stories, and Snap Map to train its AI models. That includes images, videos, audio, and text. Users can opt out in the Privacy Controls section of Settings, though opting out won’t undo past training.
Snap’s situation isn’t easy. It’s stuck between Meta’s massive scale and TikTok’s fast growth. Analysts see AI automation as a way to break out of that trap. But for the 1,000 workers losing their jobs, the AI revolution comes at a very real cost.
