Microsoft dumps Metaverse for ChatGPT

Microsoft ChatGPT Metaverse

Just before the official launch and eventual popularity of ChatGPT, Microsoft was booming with Metaverse. However, after ChatGPT hit the public, it appears that the Metaverse team at Microsoft is now dormant.

Microsoft ChatGPT Metaverse

According to an internal report, Microsoft closed the Industrial Metaverse team. The funny thing is that this team was only active for just four months. The company also fired all 100 of its staff, including its two early pioneers. The next day, there were reports that Microsoft is firing workers from its Xbox team. The layoff also hit its Surface and mixed reality (MR) HoloLens divisions.

In a message to all staff at the start of this year, Microsoft President Satya Nadella confirmed the layoff of 10,000 workers or 4.5% of the company’s workforce. Since then, there have been rumours that this round of cutbacks may target the Metaverse divisions that are pertinent. Soon after, Microsoft revealed the shutdown of AltspaceVR, a virtual reality social network it had bought in 2017. The company also dissolved all associated teams.


It is bad news for the brand that Microsoft has made it obvious. It is now clear that the company wants to withdraw from the Metaverse. Microsoft has been one of the key proponents of Metaverse and VR, AR, and MR techs ever since the release of HoloLens in 2015. VR and AR have, however, made slow progress in the general market over the past few years. For this reason, Microsoft has routinely cut back on related funding. Microsoft didn’t take back the stage until the idea of the Metaverse was introduced at the end of 2021. However, ChatGPT, a major shift that could subvert the software industry, was created as the metaverse grew frigid at the end of 2022. It is clear that Microsoft’s strategy priorities have changed.

Microsoft Metaverse survived only four months

In October 2022, Microsoft created its Industrial Metaverse Core. According to Microsoft’s earlier intro, the group mainly aids clients in creating an operating system that can manage a variety of equipment, including electricity and industrial robots. This will allow engineers to integrate AI into industrial machinery and processes without having any prior experience with software development. The Azure online program from Microsoft includes this as well. Microsoft refers to it as the “brain” of tools for industrial intelligence.


This team’s forerunner was Project Bonsai, an AI firm that Microsoft bought in 2018 and went by the moniker Bonsai. Two of Bonsai’s founders—former CEO and co founder Mark Hammond and co founder and former director of product Ken Blanken Brown—became Microsoft Directors of the Industrial Metaverse team. However, Microsoft also fired the two execs during this total metaverse retreat.

One could say that the Industrial Metaverse initiative plays a key role in Microsoft’s metaverse strategy.  Project Bonsai, Bonsai’s revised project, made its debut at Build 2020.  The team had already released a free trial version at that time on Azure and was preparing to release a paid version. Microsoft stated at the time that Project Bonsai was only the outset of its plan to assist corporate clients in the creation of automated systems.

Microsoft had top alliances with its Metaverse work

Judson Altoff, executive vice president and chief commercial officer of Microsoft, announced at a meeting in September 2020 that Coca-Cola, Unilever, Anheuser-Busch InBev, General Motors, and Mexican food company Grupo have deals with Microsoft’s Industrial Metaverse service.

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Meta VR headset


However, the progress of this team was hardly ever mentioned between 2020 and 2022. Nevertheless, this changed in May 2022 when Microsoft unveiled the industrial metaverse theme company at the Build 2022 developer conference.

Microsoft stated that the Project Bonsai staff serves a variety of clients. The range of the partnership includes the automotive, culinary, financial, and other industries. Microsoft’s HoloLens virtual reality headset will be used by new clients like Kawasaki Heavy Industries to create robots.

Read Also:  FTC is probing the relationship between Microsoft and OpenAI

The Industrial Metaverse team was officially formed in October 2022. Satya Nadella, the chairman and CEO of Microsoft, and other leaders voiced support for the Industrial Metaverse core team’s efforts. However, the crew was entirely fired after 4 months.

Focus on the Metaverse didn’t pay off

Along with the industrial metaverse, Microsoft made changes to other metaverse-related units. Among them, AltspaceVR was fully shut down, and cut backs also had an impact on the HoloLens div. One of the first social VR platforms was AltspaceVR, which began in 2015. Like today’s Horizon Worlds from Meta, AltspaceVR is mainly made up of user-created settings called “worlds” where users can interact, chat, and hold virtual events like business meetings and magic shows. In 2017, AltspaceVR was on the brink of failure due to financial issues, but Microsoft bought it just in time, leaving the firm on a cliffhanger.


But five years later, this old product is still in danger of being shut down. Microsoft had given up on VR and focused Metaverse Social on the work place. The AltspaceVR crew confirmed in a farewell posting that it would now turn its attention to Mesh. It will assist the Mesh team in any way it can. Microsoft’s 2021 debut of Mesh is geared toward businesses that require remote cooperation and aims to integrate social VR technology into the workplace.

Although HoloLens hasn’t been totally cut off in terms of tech, it has recently been in bad shape, and the staff members have also suffered greatly. The augmented reality device was touted as “the next great thing” when Microsoft CEO Satya Nadella first unveiled the HoloLens in 2015. The success of this well known hardware item has not been easy to track, and it has been based on sizable buys from the US military. More than 70 HoloLens staff are presumably exiting the firm in 2021. In fact, more than 40 of them are likely moving to Meta.

HoloLens team suffered for the metaverse

According to multiple reports, the HoloLens team will face hurdles in 2022 when the metaverse is popular in terms of tech, management, and financing. A Business Insider article from February 2022 stated that Microsoft had ditched plans to issue the HoloLens 3. According to one of the Microsoft sources cited in the article, the HoloLens tech may die a natural death.

HoloLens 2

At that point, Microsoft spokes man Frank Shaw denied the report that HoloLens is on its death bed. He claims that this tech is a vital part of Microsoft’s plans in new fields such as MR and metaverse. However, this statement was not enough to convince the industry that HoloLens is dying. Also, the statement did not refute reports that there will be no HoloLens 3. HoloLens 2 is already three years in the market, thus, its successor is long overdue.

hololane 2


Based on the available data, it is still too early to deduce that Microsoft has given up on the Metaverse totally. Microsoft keeps working with Meta in workplace settings, and HoloLens still has a use case. After AltspaceVR was shut down, some teams went to assist the B-side mixed reality project Mesh. It is not difficult to see that Microsoft favors projects that can clearly be of benefit in the near term rather than those that require long-term funding.

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