Alibaba Group Holding is reducing its metaverse operations, becoming the latest major tech player to re-evaluate its commitment to the sector. According to sources, dozens of employees from Alibaba’s metaverse unit, Yuanjing, have been laid off as part of a restructuring process aimed at boosting organizational efficiency. Yuanjing, which operates in Shanghai and Hangzhou, previously employed several hundred people and reportedly received “billions of yuan” in investment. The layoffs reflect Alibaba’s strategic shift in resources and are part of a broader trend among tech companies pulling back from the metaverse after initial enthusiasm.

The restructuring does not mark the end for Yuanjing. Alibaba intends to keep the unit active, though with a more refined focus on developing metaverse applications, tools, and customer-focused services. The metaverse division will prioritize practical applications over broad investments in the virtual landscape, shifting focus to areas with clearer paths to profitability and customer value.

Chinese companies often frame layoffs as “optimization” to avoid negative public attention, and Alibaba did not immediately respond to requests for comment.

Alibaba’s decision aligns with similar moves by other Big Tech firms globally, which are reconsidering metaverse investments as the sector has yet to deliver broad commercial success.