China’s e-commerce giant Alibaba is reportedly scaling back its metaverse ambitions amid the rapid growth of AI. According to the South China Morning Post (SCMP), Alibaba is cutting dozens of positions within its metaverse division, with sources suggesting the company aims to restructure and enhance efficiency. Previously, Alibaba invested $60 million (roughly Rs. 504 crore) in Nreal, a Chinese AR glasses maker, as part of its metaverse initiatives.
Alibaba’s metaverse unit is called Yuanjing, which was reportedly established back in 2021. As per reports, the latest job cuts from Alibaba’s Yuanjing unit are impacting the teams in Shanghai and Hangzhou.
The exact number of layoffs within Alibaba’s metaverse unit remains undisclosed, and the company has yet to release an official statement on the matter.
As per the SCMP report, ‘billions of yuan’ have been poured into Alibaba’s metaverse unit, which employs a ‘few hundred’ workers.
The metaverse is a blockchain-powered virtual ecosystem where users interact as digital avatars. Within these immersive, lifelike digital worlds, people can socialize, work, shop, play games, and enjoy entertainment—all from the comfort of their homes.
In recent years, excitement around the metaverse has fluctuated significantly. Brands like Lamborghini, Samsung, and Apple have explored the metaverse as a way to engage with younger audiences.
Since its launch in 2020, Mark Zuckerberg’s Meta has faced consecutive losses in its metaverse-focused division, Reality Labs, which reported further declines as recently as April. Similarly, China’s Baidu has shifted focus from the metaverse to AI. Last year, following Baidu’s pivot to generative AI, its head of AI development resigned.
Despite the reported layoffs, Alibaba is expected to retain its Yuanjing unit, which will continue research and development focused on metaverse use cases, the report notes.
Back in June 2023, blockchain firm Near Foundation had entered a partnership with China’s Alibaba Group to help developers build on its blockchain infrastructure.