Alibaba Lays Off Dozens in Metaverse Division Amid Declining Sector Hype
According to a source close to the situation, Alibaba Group Holding is scaling back its metaverse operations. This move marks the company as the latest in a series of Big Tech firms reassessing their commitments to the once trendy sector, as highlighted in a report by the South China Morning Post.
Employees Laid Off in Company ‘Restructuring”
According to a source, dozens of employees at Yuanjing, Alibaba’s metaverse unit, have been laid off as part of a restructuring effort to optimize and enhance organizational efficiency. The South China Morning Post provided further details on the situation.
Alibaba, which owns the South China Morning Post, hasn’t responded to requests for comment yet. It’s common for Chinese companies to describe job cuts as “business optimization” to avoid drawing public scrutiny. The layoffs, first reported by Chinese media on November 1, impacted Yuanjing’s operations in both Shanghai and Hangzhou, the capital of Zhejiang province. Yuanjing, which had received billions in investment, previously employed several hundred people, according to AI Jingxuanshe.
Despite the cuts, a source told the South China Morning Post that the Alibaba unit will continue to operate, focusing on metaverse applications and providing services in this space. Yuanjing was established in 2021 during the peak of metaverse excitement, with major Chinese companies—including Alibaba, Tencent, ByteDance, Kuaishou, and Li Auto—rushing to register metaverse-related trademarks as they explored new opportunities in this emerging digital realm.
Alibaba’s decision to downsize its metaverse team reflects a broader trend among tech giants pivoting away from the once-hyped sector in favour of investing in artificial intelligence (AI).
Last year, Facebook’s parent company, Meta Platforms, also laid off employees in its metaverse division.
Reports in October highlighted layoffs in the Facebook Agile Silicon Team, part of Reality Labs, which focused on developing custom semiconductors.
Additionally, Baidu’s Ma Jie, who led the company’s metaverse efforts, left in May as the firm shifted its focus toward AI, shortly after the introduction of ChatGPT by OpenAI. Alibaba has been involved in several metaverse initiatives, including leading a $60 million funding round for Chinese AR glasses maker Nreal. Many view AR, virtual reality, and mixed reality as key technologies for accessing future metaverse platforms.
Yuanjing has developed a cloud-based operating system for metaverse applications in gaming and industry. Meanwhile, local governments in China have been launching plans for metaverse-related projects, despite state media’s warnings about market speculation.
In December 2022, Zhejiang province unveiled a metaverse development plan aiming to establish industries valued at over 200 billion yuan (around $28 billion) by 2025. Market participants and investors are closely monitoring these developments as they consider the future of Alibaba’s metaverse unit.
