Alibaba cuts spending on Metaverse amid growing interest in AI
Metaverses are losing popularity
Alibaba Group has laid off dozens of employees in Shanghai and Hangzhou who worked in a division specializing in metaverse technology.
According to sources from the South China Morning Post, dozens of employees from the metaverse division were let go as part of the company’s restructuring and organizational efficiency efforts.
Despite the layoffs, Alibaba’s metaverse division will continue to operate, focusing on metaverse applications and tools, and providing clients with services based on this technology.
The Yuanjing division was created by Alibaba in 2021 during the hype around the metaverse concept.
The decision to downsize personnel in this sector aligns with a broader trend among large tech companies, which are reducing investments in the once-popular metaverse sector and reallocating resources to artificial intelligence.
Why AI is replacing the Metaverse
The popularity of metaverse technology is declining as companies encounter its limitations and implementation challenges. While the metaverse promised a fully digital reality for work, socializing, and entertainment, its actual utility and mass appeal have fallen short of expectations.
Many organizations underestimated the technical and financial demands of creating an immersive virtual space that would truly engage users. Additionally, equipment for accessing the metaverse — such as VR headsets — remains expensive and cumbersome.
At the same time, interest in artificial intelligence (AI) continues to surge due to its tangible results for businesses and users in everyday applications. AI is already being implemented across many industries — from task automation to analytics, healthcare, and customer service. Furthermore, AI has a low entry barrier, allowing many companies to adopt it with minimal investment, which accelerates its growth.
As a reminder, Bitget is partnering with Upland to launch its headquarters in the metaverse.
