Alibaba Group has allegedly cut ‘dozens’ of employees from its metaverse arm ‘Yuanjing’ as hype for the sector has calmed down.
The news comes from an Alibaba-owned media publication, South China Morning Post (SCMP), although it was first reported by other Chinese media sources too.
A source told SCMP that restructuring will help to enhance organisational efficiency. They also reassured that the metaverse unit at the multinational retailer would continue its work, focussing on metaverse applications and tools, while also offering metaverse-based services to customers.
Far from being abandoned, sentiment towards metaverse still remains positive within the Alibaba Group. Alibaba Cloud, a cloud computing company and subsidiary of Alibaba, explains on its website how the metaverse became the ‘next generation of the internet’:
“The Metaverse connects people and objects in the virtual world to reality, thus integrating the digital world and the physical world, digital life and social life, digital economy and real-world economy, digital assets and physical assets, and digital identity and real identity.
“The pandemic accelerated the coming of the Metaverse. Many real-life scenarios, such as O2O e-commerce, remote service hall, online education, online concerts, online exhibitions, remote healthcare consultations, and smart manufacturing, are being realised rapidly online.
“The Metaverse is the next generation of the Internet, based on virtual reality (VR) and augmented reality (AR).”
Cutbacks in the Metaverse
SCMP pointed to a report by the online publication Al Jingxuanshe that the redundancies have come from the Yuanjing’s division in Shanghai and Hanzhou.
Previously, Yuanjing had received billions of yuan in funding for the team of roughly three hundred working there.
Founded by Alibaba in 2021during “intense hype” surrounding the metaverse, along with a number of other major Chinese companies rushing to register metaverse-related trademarks, including Tencent Holdings, ByteDance, Kuaishou Technology, and Li Auto.
Now too, Alibaba is not alone in its scaling back of operations. Last year, both Tencent and ByteDance took a step back from XR and VR also reportedly due to waning enthusiasm for the sector.
Neither of these have given up on the metaverse altogether but simply adjusting the scale of their investments to match what appears now to be a more realistic view of the space.
Even companies like Apple, seemingly at the centre of the metaverse, have also pumped the breaks on their metaverse investments.
Shift to AI
Where is all this unlocked capital being spent? SCMP believes that the cutbacks at Alibaba are coinciding with an increase in resources being ploughed into AI.
Again, this is a similar story with a number of companies that have business ties to both the metaverse and AI, particularly following the spike in attention the AI sector received when OpenAI introduced ChatGPT.
Another big name, Meta, announced it would shutter its AR studio Meta Spark, which enabled developers to create filters for Facebook, Messenger, and Instagram, in order to focus on AI.
In August this year, Meta also ended up axing a high-end mixed-reality headset that was set to compete with Apple’s Vision Pro.
Headsets which appear to have breakthrough features from a technological standpoint often do not get the response from the marketplace that vendors were perhaps expecting. Ray-Ban Stories are one such example of this.
Artificial intelligence adoption, while also the subject of over-promotion and excessive fanfares in recent times has entered mainstream usage in various forms.