Snap has decided to shut down its AR Enterprise Service (ARES) division, citing a loss of competitive advantage. The initiative, launched in March 2023, was designed to offer AR expertise to enterprise customers, including a Shopping Suite for brands that provided AR try-on features, a 3D viewer, fit and sizing recommendation technology, and an enterprise manager for digital assets.

Specifically, the decision to close the ARES division was influenced by the rise of GenAI tools that affected Snap's competitive edge and the company's assessment that further investment in web tools was more crucial than mobile. Snap's CEO, Evan Spiegel, mentioned in an internal memo that GenAI has made it easier for companies to create AR try-on experiences, making it challenging for Snap to differentiate its offerings. 

The discontinuation of ARES will result in the loss of 170 jobs at Snap, though some employees might be transitioned to other roles within the company.

Analyst QuickTake: The division's closure aligns with Snap's recent financial challenges, including its first YoY revenue decline as a public company, recorded in Q2 FY2023. Despite the closure of ARES, Snap is likely to still continue to update its AR Lens Studio, which enables the creation of AR experiences, such as the launch of GenAI tools for its Lenses Studio in April 2023 .