Snap said its loss more than doubled in the recently ended quarter despite rising use of Snapchat
Snapchat's parent company is shutting down its ARES business just around six months after its launch. GETTY IMAGES NORTH AMERICA via AFP / JUSTIN SULLIVAN

KEY POINTS

  • Spiegel said a strategic review of ARES found that the running web-based AR was "less-engaging" for customers
  • Some employees will be retained and will be absorbed by the CameraKit team
  • Snap announced that it would reduce its employees by 20% in August 2022

Snapchat parent Snap has announced that it will wind down its augmented reality (AR) enterprise business, and the move will result in layoffs. The social media company launched its AR Enterprise Services (ARES) only in March.

"We have made the difficult decision to wind down our AR Enterprise business. 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 told employees in a message Wednesday.

Spiegel further explained that things have changed since the AR enterprise strategy was pursued. The Santa Monica-based company learned over time that it had to invest "incrementally" to support web-based AR, which it found to be technically complex and "less engaging for our customers."

As a result of the company's strategic review of ARES, 170 employees will be let go. Some team members will be retained "to support CameraKit," which allows customers to access Snap's AR platform on the web and mobile apps on Android and iOS.

Departing employees will be supported through severance packages and outplacement support, Spiegel said, adding that some workers will be rehired into open roles.

"I am so sorry that this venture did not work out as we had hoped. Leading in augmented reality means that sometimes we will fail, and I am proud that our team dared to build this business even if we did not succeed," he concluded.

Snap launched software as a service (SaaS) ARES in March with the goal of helping retailers reduce return rates and increase conversions through the use of AR shopping tools. ARES' Shopping Suite allows consumers to try on products such as sunglasses and clothes through virtual try-on features.

The last known layoffs at Snap took place in August 2022 when the company said it was cutting 20% of staff as part of a restructuring in its advertising sales unit.

At the end of 2021, the company had more than 5,600 employees. The Snapchat parent also said it was looking to shut down some projects.

The number of remaining employees at Snap is unknown. Snap did not immediately respond to International Business Times' request for comment.

Snap joins other social media platforms that have been hit by the wider tech reckoning.

Facebook parent Meta's last known layoffs were in May when the tech giant's chief of human resources told employees that partnerships and marketing departments would be affected by thousands in eliminated roles.

This month, X, formerly Twitter, reportedly reduced its trust and safety team that oversees and moderates toxic content on the platform. Before Elon Musk took over, the department reportedly had 230 employees. A source said there were only around 20 full-time remaining members on the team.

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