What happens if Magic Leap shuts down?

Since first uploading a YouTube teaser video of its tech five years ago, Magic Leap’s presence in the augmented reality industry has been controversial.

Some have lauded the team’s ambitions, while others I’ve talked to say the company’s posturing has dissuaded investors from taking chances on other AR hardware startups, which has hampered the industry’s advance.

Regardless of its impact, Magic Leap carries outsized weight, leading one to question what would happen to other AR companies if the company’s situation worsened.

The company announced layoffs today, with reports indicating that it is dismissing around 1,000 employees — about half of the company. Magic Leap’s added news of a major pivot to enterprise makes it seem like that wasn’t its primary strategy over the past year. From my perspective, the company looks like it is on a path to a fire sale and will be dependent on executing a dramatic turnaround, which grows tougher under current economic conditions.

Magic Leap has few users, so a theoretical shutdown would likely have a lesser impact than other unicorn flare-outs; still, losing a company on the forefront of a technology lauded by many as the next ubiquitous platform will certainly impact others that are striving to bring this tech to market.

The impact for startups moving forward would be nuanced. Without a substantial software suite of its own, Magic Leap relied heavily on developer partnerships, though in recent months many of those seemed to promote enterprise use cases. AR/VR startups are already in a rough position, and one less developer platform could force more companies to de-prioritize headset-based platforms and shift their focus to mobile.