Canva and Squarespace Layoffs: What the AI Squeeze on Design and Website Tools Means for Your Business

In the space of one week, two of the best-known names in DIY design and website building announced deep job cuts. Squarespace moved first, cutting around 300 roles, roughly 19% of its workforce. Two days later Canva followed with the biggest restructuring in its twelve-year history: more than 1,200 people, about 22% of staff, either let go or moved into new roles.

One layoff is a company story. Two layoffs of this size, in the same week, in the same corner of the market, look much more like an industry signal. Millions of small businesses run their marketing, and often their entire web presence, on these exact platforms, so the news deserves more attention than the usual headline scroll.

So what is actually going on, and should you be worried about the tools your business depends on? Let's sink in!

What Happened at Canva

Canva's CEO Melanie Perkins did not dress the news up. In her message to staff she called 2026 “our hardest year yet” and admitted that growth has slowed for the first time in a decade. The company cut its revenue growth forecast from 30% to 20%, naming high AI costs as one of the reasons, and earlier this year investors marked its valuation down to around $35 billion from the lofty figures of the boom period.

The restructuring goes well beyond headcount. Canva is merging its product, growth and platform teams to reduce communication friction, cutting narrowly specialised roles, and calling people back to the office a few days a week. Reading between the lines, the structure that worked while the company doubled every year is too heavy for a market where growth has to be earned again.

To be fair, the severance package earned praise even from critics: six months of salary, twelve months of healthcare, career support and a dedicated fund for those who want to start their own company. Laid-off staff even keep their MacBooks. That softens the blow for the people affected, but it does not change what the decision says about the business.

Squarespace's Quieter Cut

Squarespace's announcement was smaller in absolute numbers, around 300 people, but at 19% of the workforce it is a comparable share of the company. The official wording is familiar corporate language: simplify operations, sharpen priorities, move faster in the next phase of growth. According to reports, product and engineering teams were hit hardest, which is rarely a good sign for the pace of future improvements.

The company has had a bumpy few years. It went public in 2021 at a $10 billion valuation, never really excited the market, and was taken private again in 2024 in a $7 billion deal. It now has to fund its reinvention, including Forma, an upcoming AI-native website platform, under private equity ownership that tends to watch every line of the budget.

The Squeeze Is Coming From Both Sides

The uncomfortable part for both companies is that AI presses on them from two directions at once. On the cost side, AI features are simply expensive to run. Canva has started training its own models to reduce dependence on third-party providers, and still its AI bill grew enough to be named in the lowered forecast. Every “magic” button in these products carries a very real compute invoice.

On the demand side, the competition no longer comes only from direct rivals. General-purpose chatbots like ChatGPT and Gemini can produce a decent poster or presentation from a single prompt. Vibe-coding tools generate working websites from a short description. Wix bought Base44 for $80 million back in 2025 precisely to own that capability, Lovable raised funding at a $13.3 billion valuation, and Google shipped Stitch for generating UI designs.

That is the real story behind both announcements. The platforms that built their brands on making things simple are being undercut by something even simpler, and at the same time the simplicity they sell has become more expensive to deliver.

Do These Layoffs Signal a Wider SaaS Squeeze?

Some commentators already call it a “SaaS-pocalypse”, the moment AI makes specialised software redundant. The evidence they point to is real enough. Adobe's share price is down about a quarter over the past year despite aggressive AI investment. Free tiers keep shrinking; Canva moved the once-free Remove.bg into its paid suite. Open-source alternatives assembled with AI assistance are getting genuinely usable for basic tasks.

We would be careful with the funeral arrangements, though. Canva still serves hundreds of millions of users, and Squarespace still hosts millions of websites. What we are watching is margin defence, not collapse. But margin defence has consequences for customers: expect price rises, features moving behind higher tiers, AI add-ons bundled whether you asked for them or not, and products merged or retired faster than before.

There is also a bigger picture worth keeping in mind. The same week brought reports of slowing AI spending among businesses and fresh doubts around the huge valuations of model providers. The whole industry is searching for the point where AI costs and AI revenue actually meet, and tool vendors sit exactly in the middle of that equation, paying for compute on one side and facing customers who expect AI features for free on the other.

What This Means If Your Business Runs on These Tools

First of all, no panic. Neither platform is disappearing, and migrating a working website because of one bad news week is almost always a mistake. What this week does justify is a sober look at your dependencies.

Watch the health signals of every platform your business relies on: pricing changes, support response times, how often real product improvements ship as opposed to marketing announcements. For Squarespace users specifically, the transition to Forma is worth following closely, because platform rewrites of that scale rarely happen without some migration pain for existing sites.

And keep your assets portable. Register your domain in your own name and your own account, keep copies of your content, product data and brand files outside any single tool, and know how you would export everything if you ever had to. Portability costs you an afternoon of setup. Being locked in can cost you a full rebuild at the worst possible moment.

Practical Takeaways for Businesses Building Digital Products

If you are choosing a platform for a new project, the vendor's business model now matters as much as its feature list. A platform that is buying its way into AI, as Wix did with Base44, is in a different position from one that is cutting a fifth of its staff to fund the same transition. Neither is doomed, but the risk profiles are different, and that difference belongs in your decision.

Second, treat AI tools as a floor, not a ceiling. A prompt will get you a draft site or a passable banner in minutes, and for a side project that may honestly be enough. A business, though, still needs information architecture, SEO, integrations, accessibility and someone who maintains the whole thing in month eleven. The gap between “generated” and “done” is where quality lives, and that gap has not gone anywhere.

Third, review your own stack before the market does it for you. Make a simple list of the tools your revenue depends on, what each would cost to replace, and where your data actually sits. Companies that did this exercise before earlier platform shake-ups handled them calmly; the ones that did not learned about platform risk the expensive way.

Final Notes

A week with more than 1,500 job cuts across two household-name platforms is not a coincidence. It is a market adjusting to the economics of AI in real time, and the adjustment is not finished. The tools your business uses will survive, but they will change: pricing, packaging and product direction are all in motion at once.

The sensible response is neither panic nor denial. Keep using what works, keep your data portable, and judge every platform by what it actually ships and charges over the next year rather than by its marketing. And if your web presence has quietly become too important to sit on one vendor's roadmap, that is usually the moment to bring in a team that builds for you instead of just renting you the tools.