Alibaba Cuts Employees At Metaverse Unit As Sector Hype Fades

by
Alisa Davidson

Published: November 04, 2024 at 2:20 am Updated: November 04, 2024 at 2:20 am

by Ana

Edited and fact-checked:
November 04, 2024 at 2:20 am

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Multinational technology company Alibaba Group announced a downsizing of its metaverse department, resulting in the layoff of several employees at Yuanjing. This restructuring aims to enhance organizational efficiency and streamline operations.

The workforce reductions impacted Yuanjing’s offices in both Shanghai and Hangzhou, the capital of Zhejiang province. Established by Alibaba in 2021 during a surge of interest in the metaverse, Yuanjing was positioned to explore this emerging technology. Yuanjing, which had received financial investment amounting to “billions of yuan,” previously employed several hundred staff members.

Despite the layoffs, it is believed that Alibaba’s metaverse division will remain operational, with a continued focus on developing metaverse applications, tools, and services for its customers.

Alibaba’s involvement in the metaverse has included investments, such as leading a $60 million funding round for Nreal, a Chinese augmented-reality (AR) glasses manufacturer. AR, along with virtual reality (VR) and mixed reality (MR), is widely seen as a key gateway for accessing metaverse platforms.

In recent times, Yuanjing had been working on a cloud-based operating system designed to support metaverse integration in video gaming and various industrial applications.

Alibaba’s decision to reduce its metaverse workforce mirrors a broader trend among major technology companies, which are scaling back investments in the highly publicized metaverse sector while channeling more resources into AI.

In October of the previous year, Meta Platforms, the parent company of Facebook, reportedly laid off employees within the Facebook Agile Silicon Team, part of its Reality Labs division focused on metaverse-related semiconductor development. Similarly, Baidu experienced a leadership shift in its metaverse division when Ma Jie, the executive in charge, departed the company in May. This move came as Baidu redirected its focus toward AI advancements following the global introduction of ChatGPT by US-based start-up OpenAI a few months earlier.