Snap to close AR division for enterprises months after launch


FILE PHOTO: Traders gather at the post where Snap Inc. is traded, just before the opening bell on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 11, 2017. REUTERS/Brendan McDermid/File Photo

(Reuters) -Snap Inc is shutting its division focused on making augmented reality (AR) services for businesses within months of its launch, as the ad-dependent social media company struggles in a tough economy.

The closure of the division will result in about 170 job cuts, said Snap, which like other social media firms, has been facing the brunt of weak advertising spending from inflation-hit businesses since early last year.

Snap, the maker of photo messaging app Snapchat, started AR Enterprise Services (ARES) in March, looking to diversify its revenue beyond digital advertising that makes up the vast majority of its revenue. However, the division struggled to pick up.

"It would take significant incremental investment to grow our enterprise offering for retailers and we simply cannot make that investment at this time," CEO Evan Spiegel said in a note to employees, adding the company had to instead focus its resources on the core advertising business.

CEO Spiegel said rising adoption of generative artificial intelligence made it hard for Snap to differentiate its offering that allowed customers to use its AR tech on their sites as companies created their own experiences.

Snap said last year it would cut 20% of its staff, restructure its advertising sales unit and shut down some projects including mobile games in order to focus on improving sales.

(Reporting by Chavi Mehta in Bengaluru; Editing by Shinjini Ganguli)

Follow us on our official WhatsApp channel for breaking news alerts and key updates!

   

Next In Tech News

Apple explores push into smart glasses with ‘Atlas’ user study
Japan's Kioxia sees flash memory demand almost tripling by 2028
Hacker gets into woman’s email, changes every password, tries to make purchases
Foxconn says Oct revenue +8.59% y/y, Q4 outlook good
Want to help a friend find love? Give a PowerPoint presentation
Can an Apple�Watch get AFib patients off bloodthinners?
South Korea fines Meta about $15 million over collection of user data
Ehailing service Bolt says it’s launching in Malaysia soon, already licensed by Apad
French IT firm Atos agrees to sell Worldgrid unit to Alten
Opinion: These Apple researchers just showed that AI bots can’t think, and possibly never will

Others Also Read