Google is shrinking Area 120, its internal incubator for new projects, according to people familiar with the matter. recently, Google is reining in expenses and focusing more on its artificial intelligence business. Some teams at Area 120 were notified this week that their projects have been reorganized or canceled, according to people familiar with the matter. Affected employees will need to find new positions within Google within a period of time or be laid off. Half of Area 120’s teams are affected, the sources said.
In a statement, a Google spokesperson said Area 120 “will refocus on projects that build on Google’s deep investment in artificial intelligence and that are likely to solve important user problems.” “As a result, Area 120 is gradually shrinking multiple projects to make way for new work. Affected team members will receive dedicated support as they explore new projects and opportunities within Google.”
Area 120 will continue to incubate new projects, people familiar with the matter said.
In recent years of business restructuring, Google has typically given affected employees a window to find new roles internally. However, employees may face an uphill battle, especially with Google’s overall hiring slowdown.
Area 120, founded in 2016, offers some employees the opportunity to start a business within Google. area 120’s website indicates that “many of Google’s best ideas start as hobby projects.” One of the incubator’s most successful projects is GameSnack, a gaming platform launching in 2020 for users with low-end phones on low-speed mobile networks.
Google has recently been signaling to employees and capital markets that the company will impose stricter financial discipline in the face of a potential economic downturn. In a July email to employees, Alphabet CEO Sundar Pichai said Google plans to “focus hiring on engineering, technology and other key positions” for the rest of the year and next year.
Alphabet’s life sciences company Verily announced this week that it has raised $1 billion in a new round of funding led by its parent company, but other parts of Alphabet continue to ramp up. Dan Ives, an analyst at brokerage Wedbush Securities, said the series of changes show that Alphabet is now prioritizing real gains in the short term over “pie-in-the-sky” innovations.
Google, like all other technology companies, will have to make some tough decisions,” he said. With no more free money, investors don’t want these companies to spend like 1980s rock stars.”
