Snap Inc (NYSE:SNAP) is shutting down its unit focused on providing augmented reality (AR) services for enterprises just a few months after its launch resulting in about 170 job cuts, the company said on Wednesday.
The augmented reality for enterprise services (ARES) unit was unveiled in March as a way for businesses to integrate Snap’s AR technology into their own apps and websites as the ad-reliant company, which is known for its AR filters on the social media app Snapchat, aimed to diversify its business model.
Snap CEO Evan Spiegel said the rising adoption of generative artificial intelligence (GenAI) tools has reduced its competitive advantage because it makes it easier for companies to create their own “try-on” experiences, which were at the heart of ARES’ offering.
"After exploring our options over the past few months, it became clear that it would take significant incremental investment to grow our enterprise offering for retailers and we simply cannot make that investment at this time," Snap CEO Evan Spiegel said in a note to employees.
“It is very difficult to create a new business, and incredibly painful to wind it down, but it is the willingness to take risks and try new things that moves the world forward through innovation and experimentation.”
The company will instead focus its resources on its core advertising business, Spiegel said.
Snap shares added 2.5% to US$8.55 at noon on Wednesday.
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