Alibaba in China Cuts Jobs in Metaverse Division, Reports Say

Alibaba, the e-commerce giant of China, is said to be reducing its metaverse ambitions due to the rapid growth of AI. The South China Morning Post (SCMP) reports that Alibaba is cutting numerous positions within its metaverse division, with sources indicating a restructuring to improve efficiency. Previously, Alibaba had invested $60 million (approximately Rs. 504 crore) in Nreal, a Chinese AR glasses maker, as part of its metaverse initiatives.

The metaverse unit of Alibaba is known as Yuanjing, established in 2021. According to reports, recent job cuts within Alibaba’s Yuanjing unit are affecting teams in Shanghai and Hangzhou.

The exact number of layoffs in Alibaba’s metaverse unit is undisclosed, and the company has not yet issued an official statement on the issue.

As per the SCMP report, Alibaba has invested ‘billions of yuan’ in its metaverse unit, employing a ‘few hundred’ workers.

The metaverse is a virtual ecosystem powered by blockchain where users interact as digital avatars. In these immersive digital worlds, people can socialize, work, shop, play games, and enjoy entertainment from their homes.

In recent years, interest in the metaverse has varied. Brands such as Lamborghini, Samsung, and Apple have explored the metaverse to engage with younger audiences.

Since its inception in 2020, Mark Zuckerberg’s Meta has faced consecutive losses in its metaverse-focused division, Reality Labs, with further declines reported as recently as April. Similarly, China’s Baidu has shifted its 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 maintain its Yuanjing unit, which will continue research and development focused on metaverse use cases, as per the report.

In June 2023, blockchain firm Near Foundation partnered with China’s Alibaba Group to assist developers in building on its blockchain infrastructure.