In a surprising turn of events, Alphabet, the parent company of Google, has terminated its contract with Appen. The Australian AI data company is known for its role in training large language models and AI tools used in Google’s Bard, Search, and other products. This abrupt decision by Google has far-reaching consequences, not just for Appen but for the broader landscape of AI training. Let’s delve into the details of this unexpected development.

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The Sudden Termination

Google’s decision to end the contract with Appen, revealed over the weekend, is part of the tech giant’s strategy to evaluate and optimize its supplier partnerships across Alphabet. Courtenay Mencini, a spokesperson from Alphabet, stated that the move aims to enhance vendor operations’ efficiency. This termination, effective March 19, 2024, caught Appen off guard, as indicated in their filing with the Australian Securities Exchange.

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Financial Impact on Appen

The consequences for Appen are significant, considering Alphabet contracts contribute approximately one-third of its business revenue. In the fiscal year 2023 alone, Appen’s revenue from Google amounted to a substantial $82.8 million out of its total $273 million. The termination will impact not only Appen’s financial stability but also the livelihoods of at least two thousand subcontracted Alphabet workers.

Labor Disputes and Past Struggles

The relationship between Google and Appen has had its fair share of challenges, including disputes over wages. In 2019, Google mandated a $15 per hour wage for its contractors, a requirement Appen allegedly failed to meet. Despite wage increases in January 2023 for freelancers working on projects like Google’s Bard chatbot, labor-related issues persisted, culminating in charges from the U.S. National Labor Relations Board in June of the same year.

Industry-Wide Ramifications

Appen’s role extends beyond Google, having assisted in training AI models for Microsoft, Meta, and Amazon. The termination underscores broader shifts in the AI training landscape, with companies like Google emphasizing efficiency and cost-effectiveness. This move aligns with a trend observed in the tech industry, where layoffs are being framed as strategic realignments for the era of AI.

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Uncertain Future for Appen

As Appen grapples with the aftermath of Google’s contract termination, the future of its over a million contractors globally remains uncertain. The impact on these “ghost workers,” who play a crucial role in labeling data to enhance AI systems, is yet to be determined. Appen’s stocks have hit an all-time low, plummeting by 40%, indicating the severity of the situation.

Our Say

The termination of Google’s contract with Appen signals a transformative period in AI training dynamics. While the industry navigates these changes, it is crucial for companies to prioritize fair labor practices and transparent communication. The Alphabet Workers Union’s role in advocating for improved wages highlights the importance of ethical considerations in the evolving landscape of AI development. As the tech landscape continues to evolve, such developments underscore the need for ethical and responsible AI practices.

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