Microsoft just shut down ‘industrial metaverse’ product Project Airsim, and laid off its team, as it shifts its AI strategy to OpenAI

• Microsoft just shut down an “industrial metaverse” project.
• The team behind Project Airsim, AI-based drone software, will be laid off, a source said.
• The industrial metaverse also included Project Bonsai, once Microsoft’s answer to Google’s Deepmind.

Microsoft has shut down Project Airsim, its AI-based drone simulation software that was part of the company’s vision for a “industrial metaverse,” according to Insider.

According to a person familiar with the situation, the team behind Project Airsim received a “team update” calendar invite on Monday and was informed during the meeting that the entire team would be laid off and the project would be discontinued. Microsoft has confirmed that the project will be terminated on December 15.

“We are proud of the impact this incubation created for our customers and we will continue to invest in both Azure as the computing platform that powers the industrial metaverse, and a wide range of AI projects within the company,” the company said in a press release. “We are working closely with our customers on this transition.”

The announcement about Airsim came after Microsoft officially stopped supporting Project Bonsai on October 19, despite previously warning that it would be shutting it down. Bonsai was an artificial intelligence development platform for creating autonomous systems for industrial use. Both projects were part of Microsoft’s “industrial metaverse.”

According to the person, Microsoft purchased the AI startup Bonsai in 2018 as a response to Google’s Deepmind acquisition. Project Airsim began as an open-source project in 2017, but it later evolved into a product for industrial customers.

Project Airsim and Project Bonsai were part of an effort led by Microsoft Chief Technology Officer Kevin Scott, who facilitated the company’s collaboration with OpenAI, to incubate new products aimed at attracting industrial customers to Microsoft’s cloud.

According to a person familiar with the project, Nadella once mentioned Bonsai in the same way he mentions OpenAI today, mentioning it at employee town halls and in public interviews as part of Microsoft’s AI future.

While Microsoft initially saw these projects as a way to entice industrial app developers to help Microsoft’s Azure cloud compete with market leader Amazon Web Services, the person said Scott became less interested in the projects as Microsoft’s partnership with OpenAI expanded.

Microsoft began hyping its vision for the industrial metaverse in early 2023, around the time it announced an expanded partnership with OpenAI. The endeavor was short-lived. As previously reported by The Information, Microsoft killed the project and laid off the 100-person team responsible for it by spring, only months after forming that team.

According to the source, Microsoft kept Project Airsim alive because it believed it had a large number of potential customers.

Gurdeep Pall, the former head of product incubations and business AI who oversaw Project Bonsai and most recently Project Airsim, left the company last month after 33 years.

This is yet another example of Microsoft reallocating resources to support its OpenAI strategy. Insider reported last month that the company killed experimental products such as its Surface headphones in order to focus on investing in AI.