Alibaba Cuts Metaverse Ambitions in Pivot to AI

Alibaba Group Holding has scaled back its metaverse operations, laying off dozens of employees at its metaverse unit Yuanjing as part of a broader strategic shift toward artificial intelligence development. While the metaverse initiative initially included plans for biometric authentication and digital identity verification for virtual world access, these features are now being deprioritized in favor of AI development.

The layoffs have affected operations in both Shanghai and Hangzhou, reducing Yuanjing’s workforce from several hundred employees to a significantly smaller team. The unit, which received billions of yuan in investment when launched in 2021, will continue to operate with a focus on metaverse applications and tools.

Alibaba has characterized these staff reductions as “business optimization,” reflecting a larger trend among major technology companies reassessing their metaverse investments. This mirrors similar moves by Meta Platforms and Baidu, which have also scaled back metaverse initiatives to prioritize AI development.

The shift comes despite ambitious regional plans for metaverse development. In December 2022, Zhejiang province, where Alibaba is headquartered, announced initiatives to create metaverse-related industries valued at more than 200 billion yuan ($28 billion) by 2025. Several major Chinese companies, including Tencent Holdings, ByteDance, and Kuaishou Technology, had previously registered metaverse-related trademarks with China’s National Intellectual Property Administration.

Yuanjing was established during peak metaverse enthusiasm in 2021, developing cloud-based operating systems for gaming and industrial applications. While the unit will continue to exist, its reduced scope reflects the technology sector’s evolving priorities, particularly the increased focus on artificial intelligence development and applications.

Sources: South China Morning Post, Reuters

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November 5, 2024 – by the ID Tech Editorial Team