Snap Closes AR Division Established in 2020
Snap Inc. has decided to shut down a division that was dedicated to developing augmented reality services for businesses, marking the end of its most recent endeavor to expand beyond its reliance on advertising.
The ARES unit, short for augmented reality for business services, was just announced in March. The idea was to let retailers adapt Snap’s AR technology to their own websites. But the company eventually realized the cost and complexity of the project were too great, according to a memo from CEO Evan Spiegel, reviewed by Bloomberg and confirmed by a Snap spokesperson.
ARES was one of Snap’s biggest new ventures since the social media company was revamped last year, and its quick demise shows the challenges of adapting to the world of the artificial intelligence boom.
The company is known for AR filters on its Snapchat mobile app, and hoped to build on that experience with virtual trial tools for paying business customers. AR technology superimposes graphics over real images, including users’ faces and anything else they can see through their phone’s camera lens.
When Snap started work, it became clear that it needed to invest more in web tools than the company’s best-known mobile software. That technology was “both technically complex and of less interest to our customers,” Spiegel said in the memo.
The introduction of artificial intelligence tools has erased Snap’s competitive advantage, Spiegel wrote, because the technology makes it easy for companies to create virtual trial experiences — the focus of Snap’s efforts.
“After exploring our options over the past several months, it became clear that growing our enterprise offering for retailers would require significant additional investment, and we simply cannot do that at this time,” Spiegel said. “Creating a new business is very difficult and ending it is incredibly painful, but the willingness to take risks and try new things moves the world forward through innovation and experimentation.”
ARES had been a rare expansion project in a company struggling with declining revenue, cost-cutting and restructuring. The company’s closing will cut 170 jobs, although some employees could be hired for other positions at Snap.
“The performance of our business has reduced our ability to invest in this additional opportunity as we have had to focus our resources on our core advertising business,” Spiegel said.
The company has also launched a subscription service called Snapchat, which has quickly attracted more than 5 million users. They get early access to new AI features and app customizations.
The Santa Monica, California-based company continues to work on AR technology for the Snapchat app, advertisers and CameraKit, which allows developers to build Snap’s AR technology into their own apps and websites.
