The Massachusetts Institute of Technology (MIT) has pulled the plug on Media Lab Europe and put the company into voluntary liquidation.

It is the second time MIT has decided to bow out of a venture aimed at helping it expand its research activities outside the US. This time, the Dublin-based lab was shut down because the Irish government and MIT could not "reach agreement on a new funding model".

Two years ago, MIT ended its involvement in Media Labs Asia, which was founded in Bangalore, India, in 2001. MIT handed the venture to the Indian government after they clashed over the lab's research direction.

The problem this time wasn't direction but money. Launched in 2000, Media Lab Europe received a grant from the Irish government to help kickstart the venture. The plan was for the European lab to become a self-sustaining facility, funded largely by corporate grants. But the corporate support never materialised, due to a severe technology downturn at the beginning of the decade that forced many companies to cut back on technology spending.

Because neither MIT or the Irish government were willing to pour money into Media Lab Europe to keep it afloat, the board of directors decided to pull the plug.

Over the past four years, Media Lab Europe established more than 20 collaborative research projects, working together with BT, Intel, Orange and Ericsson.

Media Lab's board of directors, which included U2 rock bank guitarist The Edge [not enough press interest for Bono presumably - Ed] and MIT Media Lab co-founder Nicholas Negroponte, said in a statement that the Dublin research facility was involved in several advanced projects with "ground-breaking potential". The lab had already filed 14 patents.

The projects included the development of "liminal" devices aimed at merging virtual and physical reality and palpable machines, which are intended to enrich the experience of interacting with the digital world by focusing, in particular, on the sense of touch.

The Irish government had hoped that Media Lab Europe, located in a former warehouse of the Guinness brewery, could serve as a magnet to help attract other high-tech companies to the city.