Alibaba Scales Down Metaverse Operations, Lays Off Dozens Of Employees As Hype Cools Down
Alibaba Group Holding has scaled back its ambitions in the metaverse, laying off dozens of employees in a strategic shift within its Yuanjing division. South China Morning Post reported the lay offs, citing sources familiar with the restructuring.
The move positions Alibaba among other major tech firms that are reducing investments in the metaverse, as attention shifts toward artificial intelligence (AI).
The layoffs affected Yuanjing’s offices in Shanghai and Hangzhou, the capital of Zhejiang province, where Alibaba is headquartered. Originally launched in 2021, Yuanjing was Alibaba’s dedicated metaverse unit, designed to explore virtual worlds with substantial backing.
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Alibaba’s Metaverse Division Had Hundreds Of Employees
At its peak, Alibaba’s metaverse division employed several hundred people, focusing on metaverse applications, tools, and customer services. However, as part of an “optimization” initiative, the company has re-evaluated and scaled down its metaverse commitment.
Chinese companies, particularly tech giants, often refer to workforce reductions as “business optimization” to deflect potential criticism.
In Alibaba’s case, no official statement has been released to confirm the exact nature of the restructuring or future plans for the Yuanjing unit.
Yuanjing’s creation in 2021 was part of a broader trend across Chinese tech, where companies like Tencent, ByteDance, and Kuaishou, along with automotive manufacturer Li Auto, scrambled to secure metaverse-related trademarks with China’s National Intellectual Property Administration.
At that time, the metaverse was heralded as the internet’s next frontier, an immersive digital realm that captured the imagination of investors and tech leaders worldwide.
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Looks like the Chinese e-commerce giant Alibaba is trimming its metaverse squad, letting go of dozens to focus more on AI—classic move, right?
Their Yuanjing unit, which popped up in 2021 when the metaverse was the next big… pic.twitter.com/76JUtZzjkh
— IBC Group Official (@ibcgroupio) November 4, 2024
In addition to Yuanjing, Alibaba previously invested in augmented reality (AR) and virtual reality (VR) projects as avenues into the metaverse.
Notably, Alibaba led a $60 million investment in Nreal, a Chinese AR glasses manufacturer.
AR and VR technologies have been viewed as fundamental to accessing metaverse platforms, promising applications that span gaming to industrial operations. Yuanjing itself developed a cloud-based system to support metaverse use in video gaming and other applications.
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Companies Flip To AI
However, Alibaba’s recent downscaling reflects a global recalibration within the tech industry. Companies that once led the charge into the metaverse are diverting resources to AI, which is being hailed as the next revolutionary technology.
Other major players, including Meta (formerly Facebook) and Baidu, have also curtailed their metaverse investments.
Last October, Meta reportedly laid off staff within its Reality Labs division, which focused on metaverse-related chip development.
Similarly, Baidu saw a major shift in focus to AI following the release of OpenAI’s ChatGPT, with Baidu’s own metaverse lead, Ma Jie, departing from the company in May 2023.
Despite waning corporate enthusiasm, local governments in China continue to support metaverse-related projects. Zhejiang province, for example, announced a plan in December 2022 to cultivate a metaverse industry valued at 200 billion yuan ($28 billion) by 2025.
Nonetheless, Alibaba’s pivot suggests that tech giants may find more immediate potential in AI advancements rather than in developing expansive virtual worlds.
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