Just six months after it launched, Snap Inc. is closing its AR Enterprise Services (ARES) division, with CEO Evan Spiegel citing the company’s poor business performance and the rise of generative AI as factors contributing to the about-face. The closure will result in the elimination of 170 jobs.
“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,” said Spiegel in a letter to employees, adding that continued revenue declines have “reduced our capacity to invest in this incremental opportunity as we have had to focus our resources on our core advertising business.”
Launched this past March, ARES was intended to take Snap’s prowess with augmented reality, developed over years for its Snapchat social media platform, and share that tech with the world through white-label enterprise-level solutions for virtual product fitting and try-on. But Seigel said that the landscape has shifted since then, not least because of the rapid rise of generative AI, which “has made it easier for companies of all sizes to create try-on experiences for their customers and made it harder for us to differentiate our offering.”
Seigel also admitted that while the initial plan was to leverage the company’s existing AR technology, which was designed primarily for mobile platforms, it quickly became clear that any enterprise offering would have to include web-based AR functionality, which would have required significant incremental investment while offering little benefit to Snap’s core business, Snapchat.
While the ARES division is going away, the company will continue to support CameraKit — a service that allows developers to integrate Snapchat camera features like lenses into their own apps — as well as build new AR experiences for its own platforms. Seigel also said the company would look to grow its Sponsored AR business, which helps companies create AR experiences for Snapchat users. Some members of the ARES team will stay on to support these ongoing initiatives, but the bulk of the team will be let go.
“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,” said Seigel. “The courage and strength of our AR Enterprise team members embodies so much of what I love about Snap, and I am so sorry that this venture did not work out as we had hoped.”