Alphabet’s Decision to Terminate Partnership with Appen: Impact on AI Industry and Workers

The technology industry has been abuzz with the recent news of Alphabet, the parent company of Google, terminating its partnership with Appen, an Australian artificial intelligence (AI) data firm. This decision, which will go into effect on March 19, 2024, will significantly impact both the AI industry and the workers employed by Appen.

Appen, which has a platform of about 1 million freelance workers in more than 170 countries, has been a key player in the AI industry for nearly 30 years. The company has helped train AI models for a star-studded list of tech behemoths, including Microsoft, Nvidia, Meta, Apple, Adobe, Google, and Amazon. Alphabet, in particular, accounted for roughly one-third of Appen’s revenue, making it a significant client.

The termination of the contract between Alphabet and Appen came as a surprise to the latter, as it had “no prior knowledge of Google’s decision to terminate the contract.” The decision will impact at least two thousand subcontracted Alphabet workers, according to the Alphabet Workers Union.

Despite Appen’s impressive client list and long history, the company has struggled in recent years. Revenue dropped 30% in 2023, after declining 13% a year earlier. The company attributed the decline in part to “challenging external operating and macro conditions.” In addition, Appen has faced labor issues, including disputes over wages and allegations of firing workers who spoke out publicly about frustrations with workplace conditions.

The termination of the contract between Alphabet and Appen comes at a time when the AI industry is undergoing significant changes. Large language models, such as OpenAI’s ChatGPT and Google’s Bard, are scouring the digital universe to provide sophisticated answers and advanced images in response to simple text queries. Companies are spending far more on processors from Nvidia and less on Appen.

Appen’s past work for tech companies has included evaluating the relevance of search results, helping AI assistants understand requests in different accents, categorizing e-commerce images using AI, and building out map locations of electric vehicle charging stations. The company has also touted its work on search relevance for Adobe and on translation services for Microsoft, as well as in providing training data for lidar companies, security applications, and automotive manufacturers.

However, the underlying LLMs behind today’s AI tools operate differently than in the past. They are scouring the digital universe to provide sophisticated answers and advanced images in response to simple text queries. Companies are spending far more on processors from Nvidia and less on Appen.

Google and Appen have had conflicts in the past, including a dispute over wages. In 2019, Google said its contractors would need to pay their workers $15 an hour. Appen did not meet that requirement, according to public letters written by some workers. In January 2023, after months of organizing, raises went into effect for Appen freelancers working on the Bard chatbot and other Google products. The rates went up to between $14 and $14.50 per hour. However, labor issues persisted, and in June, Appen faced charges from the U.S. National Labor Relations Board after allegedly firing six freelancers who spoke out publicly about frustrations with workplace conditions. The workers were later reinstated.

Appen wrote in Monday’s filing that it will focus on managing costs, turning the business around, and providing customers with quality AI data. “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,” the company wrote.

The termination of the contract between Alphabet and Appen is a significant development in the AI industry. It highlights the changing nature of the industry and the challenges that companies like Appen face as they try to pivot to generative AI. It also raises questions about the future of the workers who will be impacted by the termination. The Alphabet Workers Union has called on Google to provide severance packages for the workers who will be affected.

In conclusion, the termination of the partnership between Alphabet and Appen is a significant development in the AI industry. It highlights the changing nature of the industry and the challenges that companies like Appen face as they try to pivot to generative AI. It also raises questions about the future of the workers who will be impacted by the termination. The Alphabet Workers Union has called on Google to provide severance packages for the workers who will be affected. The impact of this decision will be felt not only by Appen and its workers but also by the broader AI industry. Only time will tell how this development will shape the future of AI and the workers who build and power it.