In a move to diversify its AI business
operations, Snap is spinning off its generative AI team into a new, independent entity called Dotmo that will focus on the development of artificial intelligence (AI) models and immersive gaming
experiences.
According to a report from TechCrunch, Dotmo will operate with a license that allows the company to adapt Snap’s proprietary technology for
gaming and interactive entertainment platforms.
The new entity will also consist of Snap’s current
generative-AI video team, which has decided to technically leave Snap to work on projects unrelated to the social-media platform.
Due to the rising costs of developing AI models and immersive gaming experiences internally, Snap has decided to connect its generative AI video team to a separate company
called Dotmo.
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A representative from Snap told TechCrunch that while the planned digital experiences at Dotmo will exist separately from the social media
company’s core business, future partnerships with Dotmo may be considered if the fit seems right.
Snap will receive a large equity stake in Dotmo,
while Dotmo may eventually seek funding outside of Bobby Murphy, Snap CTO and lead investor in Dotmo. Murphy will possess a “significant stake in the new firm,” the report
reads.
In addition, the report says, “through a financial backer, Murphy will continue to work for Snap full-time as its CTO and continue to lead its
GenAI research and development initiatives.”
Despite retaining 950 million daily active users while growing its revenue across all markets in Q1 2026,
Snap has been struggling with establishing a clearer path to net-income profitability.
The company’s stock price plummeted this week after its new generation of Specs was unveiled, adding another potential challenge
in Snap’s long-term revenue plans.
Snap cited high costs in the development of AI models and immersive gaming
experiences as a major reason for the creation of its Dotmo spinoff.
If Dotmo is successful, the entity
could help cut Snap’s AI-investment costs, while also expanding its creative portfolio.
