Snap Dismantles AR Enterprise Business, Axes 170 Jobs

Snap Inc. SNAP is curtailing its AR Enterprise operations, bidding farewell to nearly 170 staff from the division.

AR Enterprises Services, or the ARES solution, was launched earlier in March this year. It is a Shopping Suite that uses augmented reality for businesses providing 3D Viewer, AR Try-On, Fit Finder, and more – directly on merchants' apps and websites.

After delving into various avenues in recent months, the Santa Monica, California-based firm realized that injecting additional investment into the segment is a demanding endeavor the company finds challenging.

While starting the business, Snap believed that it could primarily leverage its existing mobile AR technology to run the unit. But over time, the company needed more funding to support web-based augmented reality, which is technically complex and less engaging for our customers. 

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Snap was also hurt by the advent of generative AI, which made it easier for companies of all sizes to create try-on experiences for their customers and made it harder for the tech behemoth to differentiate its offering in the new segment.

Snap is also planning to focus more on its core advertising business, which has weighed on its capacity to invest in this "incremental opportunity."

However, the company said it will continue to invest in supporting its CameraKit partners.

In addition, Snap also identified new opportunities to grow its Sponsored AR business on Snapchat, the company said.

Regarding the termination, the company's CEO Evan Spiegel commented: "We will do our best to support the team members who are leaving our business by providing severance packages and outplacement needs, and by rehiring team members into open roles where possible."

Price Action: SNAP shares are trading higher by 1.7% to $8.48 on the last check Wednesday.