Google Makes Cuts to In-House Startup Incubator

The incubator oversaw 14 projects before the cuts this week, the people said, including Qaya, a team working on building online storefronts for creators.

Area 120’s cuts will permanently reduce the unit’s size, the people said.

“Area 120 is winding down several projects to make way for new work,” a Google spokesman said in a statement, adding that the unit will be shifting its focus to artificial intelligence. “As a result, Impacted team members will receive dedicated support as they explore new projects and opportunities at Google.”

Bloomberg previously reported the cuts.

Google is navigating a weakening online advertising market that has tripped up many large tech companies in recent months.

In July, Mr. Pichai said Google would slow hiring for the rest of the year and urged employees to be “more entrepreneurial.” Mr. Pichai said at a conference last week he wanted the company to become 20% more productive, without providing details on how he would measure the improvement.

Area 120 is among Google’s efforts to encourage entrepreneurship at the company, which has at times battled a reputation for struggling to develop large new products. The unit’s name is a reference to a longstanding policy that allows Google employees to spend 20% of their time working on side projects.

Employees apply to Area 120 and receive initial funding from Google to work on their projects for six months. The program was partly designed to retain Google employees who might otherwise leave to build startups.

Several Area 120 projects have evolved into Google products. Last year, Google said a team working on interactive spreadsheets would begin developing the product for cloud computing customers.

Others have struggled to find traction within the company. Tangi, a short-form video app, folded last year after its team members joined Google’s search division to continue working on the project.

Some Area 120 projects include disclaimers on their websites warning they are “inherently subject to more change—up to and including discontinuation—than other more mature Google products.”

Elias Roman, the managing partner of Area 120, told employees this week’s cuts would allow the incubator to focus on projects using artificial intelligence, the people said. Mr. Pichai has made AI one of Google’s biggest priorities since taking over as CEO.

Area 120 previously reported to Google’s head of corporate development,

Don Harrison,

before moving last year to a new organization focused on experimental efforts that is led by longtime product executive Clay Bavor.

Write to Miles Kruppa at miles.kruppa@wsj.com