Alibaba Group Holding is shrinking its metaverse ambitions, making it the latest tech giant to pull back from spending in an area that was momentarily all the rage.
An insider source also said Alibaba’s metaverse unit Yuanjing has laid off its relevant employees in Shanghai and Hangzhou this year, including multiple employees. The change is part of a broader effort to streamline the organisation, the South China Morning Post reported.Â
Alibaba Cuts Metaverse Operations with Dozens of Layoffs
Yuanjing, a division previously funded to the tune of “billions of yuan” and employing hundreds has now been reassigned within the Alibaba group.
Even with the cuts, however, the unit is expected to remain working, redirecting towards metaverse-based apps and services for customers and enterprises. This shift underscores Alibaba’s efforts to retain a foothold in the metaverse space but with a smaller headcount and more streamlined function.
The layoffs also follow a run of other tech giants weaning resources away from the metaverse and with a growing focus on AI. AI has had an impressive journey in a short amount of time that you can already see being deployed into different sectors which would make it seem definitely like a good investment.
AI has become mainstream due to its relatively lower cost of entry in many industries, and it is being used to automate routine tasks, provide customer services, and process customer analytics. Investors hope that AI will be a more successful and lucrative technology, as it promises results that fit into immediate business needs.
Major Layoffs in the Crypto and Metaverse Space
At the same time, other tech and crypto firms are also making the same cuts. Recently, Kraken, a cryptocurrency exchange, announced that it was laying off 15% of its workforce, which amounts to around 400 employees, and attributed this development to an ongoing strategic restructuring process.
Similarly, blockchain software giant ConsenSys, the company behind MetaMask, revealed on November 9 that it will lay off more than 160 staff due to economic and regulatory conditions.
This move by Alibaba to pare back the company’s metaverse efforts, while significant, is part of a broader trend across tech. With the focus moving to high-impact technologies such as AI, the metaverse sector that was gaining steam a couple of years back is seeing a reality check, and many companies are reassessing and reallocating resources from metaverse to other sectors.