Snap Separates Generative AI Video Unit Into Independent Company

Snap Inc. is spinning off one of its internal AI teams into a separate company called Dotmo, as the social media firm looks to reduce the cost of developing advanced generative AI technologies. The new company will focus on building AI models capable of creating interactive gaming and entertainment experiences.

According to Snap, the high expense of developing and operating these AI systems internally was one of the key reasons behind the decision. Although Dotmo will operate independently, it will maintain close ties with Snap.

The startup will receive a license to adapt Snap's existing AI technology for gaming and interactive entertainment platforms. Its founding team will also consist of current Snap employees who are leaving the company to launch the new venture.

Bobby Murphy Backs The Project

In return for providing talent and technology access, Snap will receive a substantial equity stake in Dotmo. The arrangement allows Snap to benefit if the startup grows successfully in the future.

The company also indicated that Dotmo could seek external funding at a later stage.

Second Major Spin-off This Year

The move marks Snap's second major spin-off initiative in 2026. Earlier this year, the company separated its smart glasses business into an independent company focused on developing the Specs product line.

That launch received a mixed response from investors due to concerns over the device's roughly $2,200 price tag. Snap also reduced its workforce earlier this year, cutting around 1,000 jobs as part of broader restructuring efforts.

A different strategy for AI

The arrangement also allows Snap to retain exposure to any future success through its ownership stake without directly funding day-to-day operations.

As AI development becomes increasingly expensive, the Dotmo spin-off highlights how technology companies are exploring new ways to pursue innovation while managing costs and investment risks.