Chinese e-commerce leader Alibaba is scaling back its metaverse efforts as it begins layoffs in its Yuanjing metaverse unit, according to a report by the South China Morning Post.
This move involves dozens of employees and is part of a broader “restructuring that aims to optimize and improve efficiency in the organization,” the report states.
Despite these layoffs, Alibaba’s metaverse unit will remain operational. It will focus on specific applications within the metaverse and related tools.
The company established its metaverse unit in 2021, during a period when interest in the metaverse was high.
In 2022, Alibaba invested $60 million in augmented reality glasses maker Nreal. The following year, Alibaba Cloud collaborated with Avalanche to launch “Cloudverse,” a platform designed to help businesses create their own metaverse environments.
The establishment of this unit may have been influenced by positive government sentiment toward the metaverse and Web3 technologies.
In 2023, Nanjing introduced its first government-backed metaverse platform. That same year, China’s Ministry of Industry and Information Technology (MIIT) released a three-year action plan aimed at promoting metaverse innovation across various industries, with a focus on security and technological progress.
Private companies have sought to explore synergies and advancements in this area. For instance, in 2023, China Mobile formed a strategic alliance with major players like Huawei, Xiaomi, and Mango TV to advance metaverse initiatives.
In 2024, MIIT continued this trend by partnering with industry leaders, such as Huawei, Lenovo, and Tencent, to support the growth of the “Yuanverse” metaverse, driving innovation across sectors.
However, the initial excitement surrounding the metaverse appears to have waned, prompting several companies to reduce their workforce in their dedicated departments.
For instance, Meta’s Reality Labs announced a restructuring plan this year, creating separate Metaverse and Wearables units and implementing layoffs that primarily affected leadership positions. Meta has faced significant financial challenges, reporting a $4.5 billion loss in Q2 2024 and a $4.65 billion operating loss in 2023.
