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The backstory: Australian company Appen has played an important role in training artificial intelligence (AI) models for industry giants like Microsoft, Apple and Google. Particularly, it’s helped train Google’s chatbot, Bard, Google Search results and other AI products. The company has a big team of over 1 million freelancers worldwide, working on projects for companies like Adobe and Salesforce. But things started to sour for the AI data firm when advanced language models like OpenAI's ChatGPT and Google's Bard came into play. Companies started spending more on Nvidia processors to stay ahead in the race, leaving Appen out in the cold.
Appen has faced other challenges before, like in 2019 when it had issues with Google over wages. Despite giving raises to freelancers working on Google-related projects last year, ongoing labor problems led to charges against Appen from the US National Labor Relations Board after the company allegedly fired six employees for voicing their discontent with work conditions.
More recently: Appen has been going through a tough time. Last year, its revenue dropped by almost 30%, following a 13% decline the year before, all because of what it called “challenging external operating and macro conditions.” In 2023, Appen relied heavily on its partnership with Alphabet, which made up over US$80 million out of the company’s total sales of US$273 million for the year.
The development: Alphabet just pulled the plug on its contract with Appen. This decision, effective from March 19, caught Appen off guard, with Appen saying it had no prior knowledge. This is a big deal because Alphabet made up about one-third of Appen's revenue. This move will impact “at least two thousand subcontracted Alphabet workers,” according to the Alphabet Workers Union. In response, Appen said in a Monday filing that it’s now focusing on managing costs, restructuring the business and delivering top-notch AI data to the clients it still has. The company is also quickly changing its main goals, and we can expect more details in its FY23 full-year results next month.
“The news is unexpected and disappointing, particularly considering the progress made against Appen’s transformation and performance in November and December 2023,” said Appen.
“Appen will immediately adjust its strategic priorities following the notification of the Google contract termination and provide further details in its FY23 full year results on 27 February 2024,” Appen wrote.
“As subcontractors for Google we have been a canary in the AI coalmine calling out the precarious labor conditions we face being the human workers standing between large language models and their end users,” said Toni Allen, the executive board secretary of Alphabet Workers Union-Communications Workers of America.
“This is what AI work looks like when workers have no say in the process. It is time that the world heard our voices before this situation repeats itself far and wide,” said Allen.