A wave of mass layoffs at technology companies is likely to affect the development of entire product lines. At least from the new information about the layoffs at Microsoft, it is clear that the company has cut entire teams that developed solutions for virtual reality, mixed reality and the HoloLens headset.

Last week, Microsoft announced that it had joined Amazon, Google and other companies in laying off thousands of employees. The cuts will affect 5% of Microsoft’s global workforce, which has grown rapidly since 2020 to take advantage of opportunities created by the pandemic and the shift to remote work. However, the return of people to offices, inflation and a full-scale russian attack on Ukraine forced Microsoft to reconsider its development strategy.

Virtual and augmented reality will be one of the areas that will be reduced. In 2017, Microsoft acquired AltSpaceVR, a startup working on a virtual workspace project. Now it became known that its entire team was fired. As a result, AltSpaceVR will be shutting down for good in March, effectively curtailing Microsoft’s work in the “metaverse” field significantly. The likely successor of AltSpaceVR may be Microsoft Mesh, but it is not yet known how relevant this direction will be for the company.

In addition to the death of AltSpaceVR, Microsoft also fired the entire development team of the popular framework MRTK – Mixed Reality Took Kit. It is a cross-platform framework for spatial anchors in virtual reality. MRTK was built to integrate with Unity VR and works with Meta headsets with a focus on HoloLens.

The HoloLens project itself has been winding down in recent years following the departure of its chief architect, Alex Kipman. Microsoft signed a contract for the development of HoloLens with the US military, which recently was cut by the US Congress due to reports of problems with the headset.

The firing of the entire MRTK development team, which wasn’t supposed to release a new version until next month, suggests that Microsoft may no longer believe in virtual reality. Many see the “metaverse” as the next big thing in human-computer interaction, but even Facebook, which has renamed its entire company Meta because it believes in the technology, is also downsizing in that area — laying off 11,000 employees as recently as in November.