Alibaba has laid off employees at its metaverse unit, Yuanjing, reflecting the overall industry trend of declining interest in metaverse projects by major Chinese corporations.
Despite the layoffs, Alibaba remains committed to the Metaverse.
Chinese tech giant Alibaba is said to have laid off dozens of employees at its metaverse unit, Yuanjing, as part of a restructuring effort. The layoffs primarily affected staff at Yuanjing's operations in Shanghai and Hangzhou.
According to the South China Morning Post, Alibaba is the latest tech giant to lay off employees. The cuts at Yuanjing, which had previously hired hundreds of employees and received significant investment, signal a waning interest in the metaverse among traditional corporations.
However, a source told the South China Morning Post that Yuanjing will continue to exist but will focus more on metaverse applications and tools. With this decision, Alibaba seems to be following the lead of the American tech giant Meta, which continues to invest in its struggling Reality Labs division.
As widely reported, losses at Reality Labs accelerated in the third quarter, reaching $4.4 billion. The latest loss brings the total losses for the metaverse unit since 2019 to over $50 billion. Despite the significant losses, Meta founder Mark Zuckerberg continues to tout the potential of Reality Labs. However, like Alibaba's metaverse unit, Reality Labs is reported to have laid off some employees in October 2023.
In addition to facing declining user interest, Chinese tech giants investing in the metaverse have encountered regulatory challenges and deteriorating economic conditions, forcing them to reassess their strategies. For instance, Tencent, a company that capitalized on the metaverse craze in 2021, has faced challenges related to user data and content regulations.
However, other Chinese technology companies, such as the search engine Baidu, have scaled back their metaverse-related activities to focus on artificial intelligence (AI), a topic that is currently receiving a lot of attention.
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