Microsoft's Metaverse dream appears to be in limbo after the tech giant laid off over 10,000 employees. Most of the departments affected include those running the AR and VR projects, the two key components of the metaverse.

Now, the company is likely to pause its development of the HoloLens and other headset-based projects. The massive layoffs have mostly affected teams working on mixed reality and virtual reality. The news comes after years of pushing back the HoloLens project.

In the past, the company has tried several times to land a U.S. military contract without success. The product's program issues are to blame, according to Congress. Furthermore, the entire team working for AltSpaceVR has been sent home. Microsoft acquired AltSpaceVR in 2017, and the company was leading Microsoft's metaverse dream.

With AltSpaceVR decimated, people in the know believe Microsoft Mesh might take over. However, these are just speculations for now. Also, the platform behind the mixed reality tool kit (MRTK) framework has been affected by the layoffs.

MRTK serves as a cross-platform system responsible for producing spatial anchors within virtual spaces. Unlike AltSpaceVR, MRTK has had some success with its Unity VR integrations. This has seen it work with various headsets, including HoloLens and those produced by Meta.

What Does This Mean for Microsoft's Metaverse Dream?

The firing of entire teams working at MRTK and AltSpaceVR means Microsoft has little incentive to continue working on HoloLens. It’s a move that comes at a time when other top tech giants have been engaging in similar layoffs of their own amid slowing economies.

So far, companies like Google, Amazon, Meta, Salesforce, and Wayfair have let a substantial number of their workforce go. Most of these individuals were hired during the height of the pandemic, when some of these companies sought to meet increased demand for their products and services. Now the goal is to cut costs, but in Microsoft’s case, that means jeopardizing its metaverse dream.