Snap is spinning off its internal generative AI video team into a new, independent company called Dotmo. The venture will focus on building AI models that power interactive gaming experiences, Snap confirmed to TechCrunch.
Snap cited the high cost of keeping the work in-house as a primary motivation for the spinoff, a move that comes amid broader cost-cutting measures across the tech industry in 2026.
Although technically a separate entity, Dotmo will maintain close ties to Snapchat’s parent company. Snap will license its technology to Dotmo for use in gaming and interactive entertainment platforms. The initial team will consist of current Snap employees who are leaving the company to launch the venture.
While Dotmo is not being directly funded by Snap, Snap’s Chief Technology Officer Bobby Murphy will serve as the lead investor, holding a significant personal stake in the new firm. Murphy will remain Snap’s full-time CTO and continue to lead its generative AI research and development initiatives.
In exchange for the talent and technology license, Snap will receive a large equity stake in Dotmo — a position that could yield significant returns if the startup succeeds. Snap noted that Dotmo may eventually seek outside funding.
The spinoff is Snap’s second major divestiture this year. Earlier in 2026, Snap spun off its Specs division into a standalone company to focus on smart glasses. However, Specs’ launch faced headwinds: Snap’s stock dropped after concerns about the $2,200 price tag. Snap also laid off about 1,000 employees earlier in 2026.
Dotmo represents a different kind of spinoff than Specs, a Snap representative said. Its team will focus on digital experiences that are not currently part of Snap’s core business priorities. However, the company added that Dotmo could become a partner in the future if the fit seems right.
Spin-offs can serve various purposes — from showcasing assets and attracting investor attention to providing operational flexibility. By spinning out Dotmo, Snap may be reducing the financial burden of its AI efforts while retaining exposure to potential upside through its equity stake.
via TechCrunch AI