Alibaba to Cut Staff in Metaverse Unit
Date: 2024-11-04 Author: Henry Casey Categories: BUSINESS
China's Alibaba has begun cutting staff in its metaverse unit. Dozens of employees have been laid off as part of a restructuring aimed at improving efficiency, according to Alibaba's South China Morning Post.
Yuanjing, the metaverse unit, was created in 2021 to ride the wave of popularity of virtual worlds and related technologies. The unit operates in Shanghai and Hangzhou and has received significant investment in recent years. However, interest in the metaverse has begun to wane as artificial intelligence has become a new hot topic for large corporations, requiring significant resources.
Despite the cuts, the unit will continue to operate, developing apps, tools, and services for the metaverse. In March 2022, Alibaba also led a $60 million funding round for Chinese augmented reality glasses maker Nreal, confirming its ambitions in the metaverse.
In addition to Alibaba, other Chinese tech giants such as Tencent, ByteDance, and Baidu have all been heavily invested in the metaverse, registering numerous trademarks and developing new products.
The layoffs in this division reflect a larger trend in the industry: major companies are shifting their attention and resources to developing artificial intelligence. For example, in May 2023, the head of Baidu’s metaverse division left the company after it changed course toward generative AI. In October 2023, Facebook, now known as Meta, also laid off some employees from its Reality Labs division, which develops augmented and virtual reality technologies.
Despite its efforts, Reality Labs posted an operating loss of $4.4 billion in Q3 2023, and since 2020, the business has lost more than $58 billion. Microsoft also shut down its Industrial Metaverse Core team in February 2023, laying off about 100 employees. Disney followed suit by disbanding its metaverse division in March of the same year as part of a larger restructuring.
The layoffs at Alibaba’s metaverse division thus show a shift in priorities for tech giants as they seek to adapt to new trends and invest resources in more promising areas, such as artificial intelligence.
