Calif. social media giant Snap lays off 170 workers, admits struggles

Snap, the California-based maker of the popular messaging platform Snapchat, is laying off about 170 workers.

The job cut is tied to the firm shutting down a months-old department that made augmented reality tools for business customers, CEO Evan Spiegel announced in a Wednesday message to employees. He outlined the company’s difficulties and pointed to its tough financial position — though the firm reported having 397 million daily users last quarter, it is not profitable. 

Augmented reality technology combines live camera footage with computerized overlays — Snapchat’s face filters were one of tech’s first viral AR products in the mid-2010s, alongside the then-ubiquitous Pokemon Go. The firm has spent considerable resources on its AR ambitions since, gobbling up eyeglass-maker WaveOptics for $500 million as well as digital shopping startups Vertebrae and FitAnalytics, all in 2021. 

Snap rolled out its AR enterprise business in March, attempting to turn its expertise with the tech into a nonadvertising revenue stream. It planned to sell AR tech for retailers to use on their own apps and websites. But Wednesday’s announcement nipped those plans in the bud.

Spiegel wrote that his social media firm explored its options with AR for businesses over the past few months, but realized how much money it would take to grow its offering. “We simply cannot make that investment at this time,” he wrote.

Later in the message, he explained further: “Our business performance has reduced our capacity to invest in this incremental opportunity as we have had to focus our resources on our core advertising business.” Snap, like its rival Meta, makes the vast majority of its revenue from advertising. 

The executive wrote that Snap will provide severance packages to the outgoing workers, about 170 employees total, and make rehires where possible. The firm declined SFGATE’s request for comment and didn’t answer questions on the size of the severance packages or geographic distribution of the layoffs. Snap is based in Santa Monica and had 5,288 employees at the beginning of this year, according to a filing submitted to the Securities and Exchange Commission in February. 

Spiegel also wrote in the note that the explosion of generative AI tools has made it more difficult for Snap to set its products apart, and expressed his gratitude to the outgoing employees.

“It is very difficult to create a new business, and incredibly painful to wind it down,” he wrote.

Hear of anything happening at Snap or another tech company? Contact tech reporter Stephen Council securely at [email protected] or on Signal at 628-204-5452.