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Alphabet, the parent company of Google, had terminated its contractual ties with Appen, the Australian AI data firm that trained Google’s chatbot Bard, Google Search results, and other AI products.
The decision came after a thorough “strategic review process,” Appen was notified over the weekend of the termination, which will go into effect on March 19, as disclosed in a filing from Appen. Surprisingly, Appen expressed having “no prior knowledge of Google’s decision to terminate the contract.”
According to a statement by the Alphabet Workers Union, Alphabet accounts for approximately one-third of Appen’s revenue and impacts a significant workforce of at least two thousand subcontracted Alphabet workers.
Appen is a platform with about 1 million freelance workers in more than 170 countries. It has been a key player in training AI models for major tech giants like Microsoft, Apple, Meta, Google, and Amazon.
Despite Appen’s esteemed clientele and nearly three decades of experience, the termination of the Alphabet contract adds to Appen’s existing challenges, including a loss of customers, executive departures, and financial struggles. The company reported a 30% drop in revenue in 2023, following a 13% decline the previous year. The company has faced difficulties, reflected in its dropping stock value – from its peak in August 2020 at AU$42.44 ($27.08) on the Australian Securities Exchange to currently trading at around AU$28, down more than 99%.
Former Appen employees highlighted the company’s struggle to adapt to generative AI, reflecting weak quality controls and a disjointed organizational structure.
The termination follows historical conflicts between Google and Appen, including a dispute over wages in 2019, where Appen failed to meet Google’s requirement of a $15 hourly wage for contractors. The two companies clashed again in June when Appen faced charges from the U.S. National Labor Relations Board for allegedly firing six freelancers who publicly voiced concerns about frustrations with workplace conditions.
In its filing, Appen mentioned its commitment to managing costs, renewing the business, and ensuring the delivery of quality AI data. The company plans to adjust its strategic priorities and will provide further details in its FY23 full-year results on February 27, 2024.