Just four months after launching its industrial metaverse project, Microsoft
After forming the Industrial Metaverse Core team in October, Microsoft is laying off all 100 workers, according to The Information, which quoted a person that it says had direct knowledge of the situation. The cuts were part of a companywide reduction of 10,000 employees, about 5% of the workforce, that was announced in January.
Microsoft didn’t respond to requests for comment.
“Microsoft is pretty confident that they can always catch up because of Windows, their installed base,” says Daniel Keum, an associate professor of business management at Columbia University. “So for them, they don’t have to take all the risk, and be the first one trying to solve regulatory uncertainty around the metaverse.”
Gerald Daniels, associate professor of economics at Howard University, agrees.
“That sounds like a reasonable assessment,” says Daniels. “Now the cost of borrowing is higher so you have to be more wise with the type of investments that you’re making.”
Regulation is one of many uncertainties about the metaverse, which is generally conceived as an immersive version of the internet with some level of augmented or virtual reality.
Some visions of the metaverse are based on decentralized and interoperable technology, often including the blockchain, but that is not always the case. Meta Platforms
Keum suggested Microsoft could let Meta do the heavy lifting on figuring out what the metaverse will eventually be. He termed that approach “strategic waiting.”
The pullback makes sense in light of a broader reassessment of risk that is rolling through the tech industry, according to Keum’s Columbia business school colleague Kairong Xiao, an associate professor of finance.
“When the interest rates are zero, money is cheap and it costs almost nothing for you to experiment,” says Xiao. “You see these tech companies pouring money on a lot of futuristic projects, which may pay off in 10 or 20 years, and that’s fine, that’s rational–but now we are facing an interesting environment that is much different from a year ago, and anything that you want to invest, you want to see if you can generate a risk adjusted return more than 5%.”