Due to the high costs of internally developed generative AI, Snap, the parent company of Snapchat, has officially spun off its internal generative AI video team into a separate company called Dotmo. This move aims to alleviate the financial burden on the parent company while granting the team greater operational flexibility. The new company will focus on developing AI models that create interactive gaming experiences, with an initial team composed of several core employees who left Snap and joined Dotmo.
Although Dotmo remains independent in its organizational structure, it maintains close capital and technology ties with Snap. Dotmo will not receive direct financial support from Snap, but Snap's Chief Technology Officer Bobby Murphy will invest as a major investor and hold a significant personal stake. He will continue to work full-time at Snap and lead its GenAI research and development. As compensation for talent and technology licensing, Snap has obtained a large stake in Dotmo, and Dotmo also does not rule out seeking external financing in the future.
This strategic move marks Snap's second major spin-off this year. In early 2026, Snap had previously spun off its Specs team, which focused on smart glasses development. The AR glasses, priced at $2,200, failed to meet market expectations, leading to a drop in the company's stock price. Combined with Snap's earlier decision to cut around 1,000 jobs this year, this spin-off once again underscores its determination to tighten control over non-core businesses and optimize its financial structure. Unlike Specs, which focused on hardware, Dotmo's main focus is on digital experiences that are currently away from Snap's core business, but both sides still have the potential to collaborate in the future.
