Social-media company sheds in-house AI video unit as it looks to rein in the rising costs of developing generative-AI models and immersive gaming products
Snap Inc. is carving out its generative-AI video team into a new, independent company called Dotmo, the latest move by the social-media giant to manage the soaring costs of building artificial-intelligence and gaming technology in-house.
The new entity, first reported by TechCrunch, will be staffed by current Snap employees who are departing the company to launch the venture. Dotmo will focus on building AI models aimed at interactive gaming and entertainment experiences, and will operate under a license from Snap that allows it to adapt the company’s proprietary technology for those purposes.
Snap will hold a large equity stake in Dotmo but won’t fund the company directly. Bobby Murphy, Snap’s chief technology officer, will serve as Dotmo’s lead investor and will hold a significant personal stake in the new firm, while continuing to work at Snap full time and lead its generative-AI research efforts, according to the report. Dotmo may pursue outside funding down the line.
A Snap representative told TechCrunch that Dotmo’s work will sit outside the company’s core business priorities for now, though a future partnership “could still be considered” if the fit is right.
The spinoff is Snap’s second this year. Earlier in 2026, the company spun off its Specs smart-glasses unit into its own venture. Snap has also cut roughly 1,000 jobs in 2026 as part of a broader effort to control costs.
The restructuring comes despite signs of operational improvement. Snap returned to daily-active-user growth in the first quarter, reaching 483 million DAUs and 956 million monthly active users, both up 5% from a year earlier. Revenue rose 12% year-over-year to $1.53 billion, and the company narrowed its net loss to $89 million from $140 million in the prior-year quarter.
Even so, Snap shares fell sharply this week after the company unveiled its next generation of Specs augmented-reality glasses, adding fresh uncertainty to its long-term revenue strategy. Snap has pointed to the high cost of developing AI models and immersive gaming experiences internally as the central rationale for spinning off Dotmo.
Executives have framed such spinoffs as a way to offload development costs while retaining upside through equity stakes — a strategy Snap has now applied twice in 2026 as it works toward what Chief Executive Evan Spiegel has called a clearer path to net-income profitability.
By: Montana Newsroom