Have social networks finally cooled on Web3 projects?

This week, the company behind the now ubiquitous Snapchat reported it will cut more than 1,000 jobs as it looks to stem losses, in large part because of less ad spending than anticipated. In an effort to do that, explained Snap, it will focus on three areas as key initiatives for future development.

"We are reshaping our company to focus more intensely on three strategic priorities: community growth, revenue growth, and augmented reality. We are ending or investing much less in projects not contributing directly to these three business priorities."

Which of course makes sense, as community and revenue growth present immediate business benefit, while AR remains Snap's biggest opportunity going forward and is the area that it has continued to lead the way on.

But that also means one particularly interesting area of Snap's business gets sliced up in the shake-up.

According to The Block:

"Snapchat parent Snap Inc. appears to be closing its web3 team amid a company-wide restructuring plan."

Snap's Web3 division was exploring applications of evolving technologies in a Snapchat context, such as AR collaborations with various known NFT projects, digital clothing and items for avatars, and, potentially, and the ability to use NFTs as face-changing Lenses.
Of course, Snap would also have looked theoretically at ways to directly connect with NFT projects, so that expansions like this would be native to Snap itself.

But that, apparently, no longer shall be the case – or, at any rate, not to the degree it probably would have through Snap's own, separate Web3 effort.

Indeed, one of the leaders of Snap's Web3 group, Jake Sheinman, tweeted this after Snap's announcement:

"After 4 years at Snap, today is my last day. The company restructure decisions to sunset our web3 team were made. The same team I co-founded last year with other pirates who believe in digital ownership and the role that AR can play to support that."

So apparently, the core part of Snap's Web3 push included AR integrations, but now with the crypto crash and waning interest in NFTs, it seems no longer a problem for the app.

A mistake?
That is what many wonder: what does this mean in the broader contexts of these new, connective, and collaborative opportunities when Snap has chosen to leave Web3?
Really, it probably doesn't mean a pile. Snap can still be able to enable most of these efforts through its existing AR capabilities and partnerships, just like it is able to for example with movie studios, by partnering to make AR tie-ins. It probably does not even need a dedicated Web3 team in this sense since these processes, by and large, are not necessarily unique to Web3 projects.

Where it does lead to more questions is around the next stage of digital product integrations and the facilitation of such through Snap's tools.

Not to be outdone, Snap has also been investing in digital clothing, with a range of high-profile brand partnerships on items for Bitmoji avatars.
That, theoretically, could be the perfect bridge between Web3 and people creating their digital doppelganger on Snap that they could then use in the forthcoming metaverse experience.

Bitmoji characters are already hugely popular as a form of digital expression, with Snap reporting last year that 200 million people use Bitmoji stickers every day. Given the connection Snap users already possess with their digital doppelgangers, it makes sense that Snap would double down on this as a launch pad to enable the purchase of digital items, further committing to the Web3 shift – although the Web3 team that has been constructed appears to have been more focused on integrating real-world activations founded on Web3 properties.
Which look great, and really enhance the community experience around Web3 projects. But it doesn't quite translate into Snap's core product, which is likely why Snap has moved away from such for the time being.

Because, again, NFT sales haven't held up, with ongoing reports of scams, rug-pulls and exploits making people increasingly wary about investing in NFT art, aside from the broader crypto declines. Essentially, what the sector needs is more regulation and more defined rules around the sale of digital artworks to offer more protection-which then raises the question as to whether we even need NFTs in the first place.

You can already buy digital art, through existing tools and platforms which comply with trading and exchange rules, and provide more safeguards around such. NFTs present an alternative route to digital ownership, though the form that is current, that alternative is currently nothing like good as the processes that it's largely trying to supplant.

That is another reason excitement about Web3 initiatives is fading fast, and why Snap is probably not as interested in this space as it was--it's unclear, at least at this point, if NFTs, as a process, even function at all, in practical terms.

But the communities being formed around such are meaningful and that does open up potential for new tie-ins and digital initiatives on platforms like Snapchat. The future of digital product ownership also offers much in this respect, but at this stage of development right now, the first wave of Web3 initiatives is increasingly looking like a pressure test, and they're not in general, standing up to scrutiny.

So while Snap is taking a step back from Web3 ventures now, I don't think it will be so long-term and away from the promise that those future developments represent. I don't think it says much about what people will think about the integration of Web3 more broadly.

It is simply that, as Spiegel writes today, it's not a priority for now, and on balance, that makes perfect sense.