(Kitco News) - The metaverse is proving to be a tough nut to crack amid worsening economic conditions as Microsoft has followed Meta in a revamp of its approach to the future of Web3 by shutting down a team that was formed only four months ago to help customers use the metaverse in an industrial setting.
The Information reported on Thursday that the American tech giant has elected to discontinue the project and lay off the roughly 100 employees that worked in its Industrial Metaverse Core team.
Microsoft originally formed the team back in October with the goal of helping customers create immersive new software interfaces for operating the industrial control systems behind electrical power plants, industrial robotics and transportation networks.
Unfortunately for the unit, Microsoft announced in January that it would be laying off 10,000 employees – or roughly 4.5% of its workforce – and taking a $1.2 billion charge related to changes to its lineup of hardware products and from consolidating leases. The cost-cutting measures were done as part of the company’s efforts to shore up its finances ahead of a potential recession.
The Industrial Metaverse Core has ended up on the shortlist for layoffs, which Microsoft is looking to have completed by the end of March. The team is primarily composed of a group known internally as Project Bonsai, which is an Azure cloud service that lets engineers add artificial intelligence to industrial equipment and processes without having any software development experience.
Project Bonsai mainly focused on customers in healthcare, retail, financial services, energy, manufacturing and other industries. Its client list included Coca-Cola, Unilever, Anheuser-Busch InBev, General Motors and Mexican food producer Grupo Bimbo.
Microsoft elected to cut this service in lieu of other projects that offer near-term revenue opportunities, as it could take multiple years for the metaverse to get established to the point where it can generate meaningful revenue.
Nonetheless, the Industrial Metaverse Core team was surprised by the layoffs as Microsoft Chair and CEO Satya Nadella and other senior executives had previously expressed support for the team's work.
Microsoft told Kitco Crypto in an email that it “remains committed to the industrial metaverse” and is currently “applying our focus to the areas of the industrial metaverse that matter most to our customers and they will see no change in how they are supported."
|
| Microsoft refocuses its metaverse strategy on businesses |
Microsoft is far from the only company – in crypto or traditional markets – to announce a large round of layoffs in response to the declining economic outlook. E-retail giant Amazon has begun the process of reducing its headcount by 18,000, while Google's parent company Alphabet recently laid off 12,000 workers, equivalent to 12% of its workforce.
Facebook’s parent company Meta has also had to reduce its labor force as part of a cost-cutting initiative, announcing back in November that it would be letting go of 13% of its workforce, or more than 11,000 employees. All sectors of the company will be affected by the layoffs, including Reality Labs, the unit responsible for developing augmented reality (AR), virtual reality (VR), and prototypes in emerging technologies such as mixed reality and brain-computer interfaces
According to data compiled by Layoff.fyi, since the start of 2023, a total of 101,657 workers have been laid off by 336 tech companies. If that rate continues, the industry could cut more than 900,000 jobs in 2023, a figure that is nearly six times higher than the total for the industry in 2022.
