The Chinese e-commerce behemoth Alibaba is laying off dozens of employees in its metaverse division and cutting back on its investment in metaverse technologies. This decision is in line with a trend in the tech sector where businesses are shifting their resources to artificial intelligence (AI), which has become the next big thing.
In 2021, as interest in virtual worlds and augmented reality grew, the company introduced its metaverse business, Yuanjing, based in Shanghai and Hangzhou. Alibaba started reorganizing to improve operational efficiency, though, as the industry’s appeal declined and AI started to take center stage in technological innovation. Originally supported by large sums of money and employing hundreds of people, Yuanjing will now continue on a lesser scale with an emphasis on metaverse tools, services, and applications.
Alibaba has strategically invested in relevant industries in recent years. For example, in 2022, it invested $60 million in the augmented reality company Nreal. With trademark registrations, several significant Chinese tech firms, like Tencent, ByteDance, and Baidu, also entered the metaverse and positioned themselves to investigate the potential of the industry.
Alibaba’s choice is indicative of a larger industry trend away from metaverse initiatives and toward AI research and development. Microsoft and Meta, two of the biggest tech companies in the world, have also trimmed back their metaverse initiatives in an effort to concentrate more on artificial intelligence. Businesses are prioritizing technologies that offer instant applicability and development potential as the market continues to change quickly.
As the company transitions to artificial intelligence and adapts to the changing dynamics of tech investment and innovation, Yuanjing’s reduced staff will remain committed to creating metaverse-related goods for Alibaba’s customers.
