Layoffs at Microsoft Put Metaverse Dream in Jeopardy

The company’s metaverse ambitions appeared to have taken a backseat as it laid off thousands of employees.

Tightenings in the financial sector and other factors have sparked a trend among Big Tech companies, as mass layoffs have become the order of the day. Elon Musk’s Twitter may have begun the movement, but Microsoft is the latest to execute a mass downsizing in labor. The tech giant announced that it had laid off 10,000 employees, five percent of its total workforce, last week. Several departments took a hit, losing team members as the company looked to cut operational costs.

Microsoft’s video gaming divisions witnessed the biggest hits. 343 Industries, The Coalition, and Bethesda Game Studios saw their teams lose size significantly. Microsoft’s metaverse technology divisions were also affected. As the company’s VR and AR departments underwent downsizing, industry analysts are beginning to express doubts about Microsoft’s commitment to its metaverse ambitions and how the layoffs may slow growth in that direction significantly.

Pulling the Plug?

Among Microsoft’s metaverse divisions, AltspaceVR took the biggest hit. As one of the leading virtual reality social media platforms, AltspaceVR was the subject of a Microsoft acquisition in 2017. The mass layoffs affected every team member at AltspaceVR, and the move appears to have somewhat pulled the plug on Microsoft’s metaverse, at least for now.

Another big sufferer of the massive downsizing effort is Microsoft’s inter-platform virtual reality framework, the Mixed Reality Tool Kit (MRTK). The tool kit, with which users could place virtual objects at a location corresponding to where they are in the real world using spatial anchors, lost its whole team to the downsizing effort.

The Mixed Reality Tool Kit integrated well with Unity VR and is vital to the operations of Meta’s VR headsets and Microsoft’s HoloLens. Now that the team behind MRTK is gone, doubts surround the company’s long-term commitment to building the metaverse. The effects of the layoffs go deep, also leaving the future of the HoloLens device uncertain, as Microsoft has reduced the platform’s development efforts over the years.


Some Hope Lingers

Microsoft’s interest in extended reality and the Metaverse appears to be waning. Growing competition from Meta, SONY, and even Apple, rumored to launch its augmented reality device in 2023, seems to pressure the company. With the emergence of Open AI and Microsoft’s much-publicized interest in investing in the company, its priorities may have shifted to other emerging technologies like artificial intelligence.

However, it appears Microsoft has not given up on the Metaverse. In a blog post that announced that Microsoft has shut down AltspaceVR, the comp any shared its updated vision of virtual reality. According to the statement, there is ample opportunity to take VR beyond consumers into business, and the company is now committed to building a more accessible, interoperable, and secure metaverse.

Although MRTK and AltspaceVR are no more, a new outfit called Microsoft Mesh appears to have taken their place. In the blog post, the company declared that Microsoft Mesh would become its mixed reality division, and with it, Microsoft hoped to build a genuinely interoperable immersive metaverse for everyone.

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