Alphabet Inc.’s healthcare business unit Verily Life Sciences has revealed in an internal memo that it will lay off more than 200 workers, thereby becoming the first company under the Google LLC parent’s wide umbrella to announce it’s cutting staff.

According to the Wall Street Journal today, the job cuts will affect about 15% of Verily’s total workforce, which is said to number about 1,600. Verily Chief Executive Stephen Gillett said in the email to staff that the company will also cancel its work on a medical software project called Verily Value Suite, as well as other early-stage projects.

“We are making changes that refine our strategy, prioritize our product portfolio and simplify our operating model,” Gillett told employees. “We will advance fewer initiatives with greater resources.”

Verily is one of Alphabet’s biggest companies aside from Google itself, part of a collection of businesses that are known as “Other Bets.” It’s focused on life sciences and is working on numerous projects that involve applying data analysis and technology to treat various medical conditions.

Its projects include a virtual diabetes clinic, including the development of a contact lens that can detect diabetes that was canceled in 2018. It also runs Project Baseline, which is an effort to aggregate health data for research organizations. It also created a COVID-19 testing platform during the early days of the pandemic.

In recent months, however, Verily has looked to cancel some of its projects, including initiatives around mosquito breeding and insurance.

Gillett, who assumed the role of CEO only this month, said in the email that Verily will narrow its focus to projects around medical research and care, with big decisions taken by a more centralized leadership team, as opposed to individual groups as before. His predecessor was the well-known geneticist Andy Conrad, who vacated the CEO chair to become Verily’s executive chairman.

Verily will double down on its purpose, which is to operate in “all areas of precision health,” Gillett explained. “We will do this by building the data and evidence backbone that closes the gap between research and care.”

The job cuts come at a time of worsening economic conditions and a fall in online advertising revenues. Numerous tech companies have responded by announcing staff layoffs. Google’s rival in many areas, Amazon.com Inc., last week said it would cut more than 18,000 jobs, the most announced by any tech firm in the last year.

Facebook parent company Meta Platforms Inc., Twitter Inc., Intel Corp., Salesforce Inc., Citrix Systems Inc. and, most recently, ScaleAI Inc., have also announced significant job cuts. Earlier today, Carta Inc. and Flexport Inc. both said they’re laying off staff.

Analyst Charles King of Pund-IT Inc. told SiliconANGLE that although the timing of Verily’s layoffs coincide with those of other tech firms, it appears that they are in fact more related to the company’s restructuring, as opposed to the simpler goal of lowering expenses. “It may seem inconsequential, but it suggests that the company is approaching lowering its headcount in a highly strategic manner,” King stated.

Alphabet so far had resisted taking any action on jobs, despite a call by the activist investor TCI Fund Management in November to cut losses in its Other Bets segment. The investor said in a letter to Alphabet’s leadership that Verily in particular had too many employees on its books.

The call to action came after the Other Bets segment grossed just $209 million in revenue in the third quarter of last year, generating an operating loss of $1.6 billion. Most of the Other Bets revenue comes from the sale of health technology and internet services.

Despite running at a loss, Verily remains a popular bet with investors and has not had any trouble raising money. In September 2022, Verily revealed it had received $1 billion in funding from Alphabet and other, unnamed backers.

Constellation Research Inc. analyst Holger Mueller said it isn’t surprising to learn that Verily is struggling, at a time when many other independent startups are also losing money. “The good news for Verily is that it appears that only one of its actual products is being axed, so it looks like this is more of a portfolio restructuring operation by the new CEO,” Mueller said. “Alphabet has a history of doing this, having discontinued countless products and services in the past. The difference today seems to be that the larger Alphabet is unable to absorb the people affected by those discontinued products and research initiatives as it has done before, so we can only wish them the best of luck.”

It remains to be seen if Google itself will announce any job cuts. Last month, at a companywide meeting, Google CEO Sundar Pichai said he couldn’t make any commitments regarding that matter, saying the company is trying to “rationalize” where it can, so it’s able to “weather the storm regardless of what’s ahead.”

“It’s no surprise that these first layoffs are happening in the speculative ‘Other Bets’ group, since its collective annual expenditures far outweigh what they contribute to Alphabet’s bottom line,” King added. “All in all, Pichai is wise to keep his cards close regarding further layoffs rather than spark panic among employees.”

In any case, Alphabet may not be done. Also today, according to The Information, its industrial robotics unit Intrinsic confirmed that it has laid off 40 employees, or 20% of its staff. The move comes less than a month after it acquired a team from Open Robotics.

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