Google cuts funding, jobs in new ideas incubator

Google is making cuts in Area 120, its internal incubator for new projects, according to people familiar with the matter, as the tech giant moves to control spending and focus more on artificial intelligence.

Some teams in Area 120 were notified this week that their projects had been reorganized or canceled, according to two people who asked not to be identified because the changes are not public.

Affected workers will need to find new roles at Google within a certain period of time or lose their jobs. One person estimated that half of the teams in District 120 were affected.

A company spokesperson said in a statement that Area 120 “will shift its focus to projects that build on Google’s deep investment in AI and have the potential to solve critical user problems.”

A spokesperson for Google, which is owned by Alphabet Inc. As a result, District 120 is terminating several projects to make room for new work. “Affected team members will receive personalized support as they explore new projects and opportunities at Google.”

District 120 will continue to incubate new projects, according to a person familiar with the situation.

In recent years, Google has dealt with the cuts by giving affected employees a window to find new roles. But workers may face an uphill battle, especially as the company generally slows hiring.

Launched in 2016, Area 120 offers select employees the opportunity to work for small startups that live within Google.

The Area 120 website states that “many of Google’s best ideas start as passion projects.” Among the incubator’s biggest successes has been GameSnacks, a gaming platform launched in 2020 that caters to people using low memory devices on slow cellular networks.

However, Google has been signaling to both workers and Wall Street that it will exercise greater fiscal discipline in the face of a possible economic recession.

In an email to employees in July, Alphabet CEO Sundar Pichai said Google plans to “focus our hiring on engineering, technology and other critical roles” for the remainder of this year and next.

However, other parts of Alphabet are working to further their ambitions. Verily, Alphabet’s life sciences unit, announced this week that it has raised $1 billion in new investment led by the parent company.

Dan Ives, an analyst at Wedbush Securities, said the sequence of events indicates that Alphabet is prioritizing tangible short-term gains over creating a “pie in the sky.”

“Google, like any other tech company, is going to have to make some tough decisions,” he said. “With no more free money, investors don’t want these companies to spend like the rock stars of the ’80s.”

Read: How a startup with operations in South Africa collapsed after just one year of raising $85 million

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