Technology
Tuesday, January 23rd, 2024 6:29 pm EDT
Key Points
- Alphabet Terminates Contract with Appen: Alphabet, Google’s parent company, has decided to end its contractual ties with Appen, an artificial intelligence data firm that played a crucial role in training Google’s chatbot Bard, refining Google Search results, and supporting other AI products. The termination, effective March 19, was communicated to Appen after a “strategic review process,” catching the latter by surprise.
- Significant Impact on Appen’s Revenue and Workforce: Alphabet’s decision to sever ties with Appen accounts for roughly one-third of Appen’s revenue. This move will have a substantial impact on “at least two thousand subcontracted Alphabet workers,” as stated by the Alphabet Workers Union. Appen, based in Australia, has a history of helping train AI models for major tech companies, with Alphabet, Microsoft, Apple, Meta, Google, and Amazon contributing 80% of its revenue.
- Appen’s Struggles and Future Plans: Despite its impressive client list and nearly 30-year history, Appen has faced challenges in recent years, including a loss of customers, executive departures, and financial struggles. The company has struggled to pivot to generative AI, facing issues with weak quality controls and a disjointed organizational structure. The termination of the Alphabet contract comes at a time when Appen’s revenue dropped by 30% in 2023. In response to these challenges, Appen plans to focus on managing costs, turning the business around, and providing customers with quality AI data. The company will adjust its strategic priorities following the termination and provide further details in its FY23 full-year results on February 27, 2024.
Alphabet has severed its contractual ties with Appen, the artificial intelligence data firm that played a crucial role in training Google’s chatbot Bard, refining Google Search results, and supporting other AI products. The termination, effective March 19, was communicated to Appen after a “strategic review process,” catching the latter by surprise. Approximately one-third of Appen’s revenue was tied to Alphabet, impacting around two thousand subcontracted Alphabet workers. The Alphabet Workers Union noted the significant effect on employees. Appen, headquartered in Australia, has a prominent clientele, including Microsoft, Apple, Meta, Google, and Amazon, with these five accounting for 80% of its revenue. In 2023, Alphabet contributed $82.8 million to Appen’s total sales of $273 million. Despite its prestigious client list, Appen has faced challenges in recent years, including declining revenue, executive departures, and financial struggles. Revenue dropped by 30% in 2023, attributed to challenging external conditions. Former employees cited weak quality controls and organizational issues. Appen’s past projects involved tasks such as search result relevance evaluation, AI assistant comprehension in various accents, and categorizing e-commerce images. However, the shift to generative AI has impacted the company, leading to its stock plummeting over 99% since its peak in 2020. Google and Appen previously clashed over wage disputes, and despite efforts to address labor concerns, issues persisted, including charges from the U.S. National Labor Relations Board. Appen expressed its commitment to managing costs, revamping its business, and delivering quality AI data following the termination of the Google contract, with detailed plans expected in its FY23 full-year results on February 27, 2024.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/01/23/alphabet-ends-contract-with-appen-which-trained-bard-google-search.html
