Welcome back to our weekly roundup of happenings from XR and AI realms. Let’s dive in…
The Lede
OpenAI is closing its video generation product Sora. Thus ends OpenAI’s high-profile push into AI video and a proposed $1 billion partnership with The Walt Disney Company that never resulted in payments. The move reflects a broader shift by OpenAI toward enterprise software and coding, areas seen as more commercially viable and less resource-intensive. Sora had expanded beyond a filmmaker tool into a social video feed, an attempt to create a TikTok-like platform around AI-generated clips that failed to gain traction and introduced moderation and legal complications. Team Sora will focus on robotic simulation models. Despite strong investor interest in AI video, the category remains costly and legally complex, with copyright risk and unclear studio adoption limiting its near-term viability.
The Roundup
A Los Angeles jury found Meta and Google designed Instagram and YouTube to be addictive. They awarded $6 million to a plaintiff who claimed the apps damaged her mental health. The ruling focused on product design features such as infinite scroll, autoplay, and algorithmic recommendations, rather than user content, limiting the protections typically offered by Section 230. With more than 2,000 similar cases pending, the verdict raises the prospect of significant financial exposure and potential changes to core product mechanics, particularly for younger users. Possible outcomes include restrictions on autoplay, push notifications, and recommendation systems. Both companies plan to appeal, and legal questions around Section 230 remain unresolved, leaving the broader impact uncertain. Meta was hit with a separate $375M jury penalty in New Mexico tied to harm to minors, reinforcing the legal pressure on these hyper-scalers.
Snap’s latest integration lets users turn photos into AI-powered 5-second cinematic videos. Known as AI Clips, they can be activated with just a tap. Examples include AI clips that turn your family photos into snackable videos that display everyone scuba diving or mountain climbing. Glamor-themed AI Clips could turn your existing selfies into videos of you posing amidst a barrage of camera flashes at an awards-show red carpet. One thing that differentiates AI Clips is that their one-tap activation makes them frictionless. While most consumer-facing AI relies on users’ imaginative prompts (which Snap also offers), AI Clips are a closed-prompt system in that the themes and animations are pre-ordained.
Epic Games is laying off more than 1,000 employees as declining engagement with Fortnite has cut into revenue, forcing the company to reduce costs by roughly $500 million. CEO Tim Sweeney said the company has been “spending significantly more than [it’s] making,” reflecting a broader slowdown across the gaming industry. The cuts come even as Epic is in the middle of a high-profile partnership with The Walt Disney Company, which invested $1.5 billion for a stake and plans to build a shared entertainment universe tied to Fortnite. The layoffs underscore the gap between that long-term ambition and current financial pressure as Epic trims operations to stabilize its core business.
Apple is preparing a major overhaul of Siri that effectively turns it into a gateway for multiple AI models, including third-party assistants. Apple plans to open Siri so users can route queries to different AI systems beyond its current integration, positioning the iPhone as a neutral platform for competing models rather than a single assistant.At the same time, the company is rebuilding Siri into a more conversational, chatbot-like interface with deeper system integration, possibly including a standalone app and an “Ask Siri” layer across the OS. Net: Apple is conceding it’s behind in AI and turning Siri into an orchestrator instead of trying to win the model race itself.
Meta sweeping Metaverse, and its builders, under the carpet. Meta is laying off hundreds of employees across teams including Reality Labs, recruiting, and core social media operations, as the company continues shifting resources toward artificial intelligence. The cuts are part of ongoing restructuring tied to rising costs, with Meta projecting up to $169 billion in expenses this year driven largely by AI infrastructure and talent. The layoffs also reflect a broader pullback from its earlier metaverse push, which has generated heavy losses, as the company prioritizes data centers, chips, and AI development to stay competitive with rivals. Their flagship Metaverse, Horizon Worlds, is moving to mobile, presumably to compete against Roblox. Critics say there is little chance this subpar product with a VR following will survive.
Lynx, a French startup developing standalone mixed reality headsets, has entered judicial liquidation. The company had been one of the few European players building its own MR hardware, including the recently announced Lynx R2. Despite a capable team and early promise, the company struggled with funding, execution challenges around its first device, and limited market support. The liquidation raises uncertainty over whether R2 will ship. The most likely path forward is a sale of Lynx’s assets to another company, which could revive the product and potentially retain parts of the original team.
Spatial Audio
For more spatial commentary & insights, check out the AI/XR Podcast, hosted by the author of this column, Charlie Fink, and Ted Schilowitz, former studio executive and futurist for Paramount and Fox, and Rony Abovitz, founder of Magic Leap and Synthbee AI. This week our guest is Shelly Palmer, who advises top media and technology companies, including Meta, Apple, Google and Comcast/NBC/Universal. You can find it on podcasting platforms Spotify, iTunes, and YouTube.
Charlie Fink is an author and futurist focused on spatial computing. See his books here. Spatial Beats contains insights and inputs from Fink’s collaborators including Paramount Pictures futurist Ted Shilowitz.