Advanced Computing in the Age of AI | Thursday, February 29, 2024

Appen Suffers Major Blow as Google Terminates Multi-Million Dollar Contract 

In a significant development, Google has terminated its multi-million dollar contract with Appen, an Australian data company involved in training large language model AI tools used in several Google products including Search and Bard. Appen has also helped Amazon, Meta, and Microsoft train their AI models. 

This is a major blow for Appen, who employs over a million contractors globally. The Google contract, which is estimated to be worth $82.8 million, is set to end on March 19th, 2024. That is a significant portion of the $273 million total revenue made by Appen last year. 

Google’s decision to end the contract is part of its broader approach to optimize vendor operations. According to Google, they are working with Appen to make the transition as smooth as possible. However, this move has come as a surprise to Appen who notified the Australia Security Exchange in a filing that they “had no prior knowledge of Google’s decision to terminate the contract.”

One of the core functions of Appen contractors is to label data to enhance AI systems for tech giants like Google. They play a crucial role as they handle some of the more laborious tasks and often get paid little for their services. Some workers get paid as little as $0.02 per task. The most common tasks for the typical Appen worker include text annotation, SEO evaluation, transcription, and quality ratings. The pay rates are based on various factors including the difficulty of the task. 

There have been calls by the Alphabet Workers Union for Appen to increase pay rates. Alphabet Workers Union is the trade union of workers employed at Alphabet Inc., Google's parent company. While the union won the wage increase, it was less than expected. Many of the Appen workers were laid off, with Appen citing the move as a result of unfavorable business conditions. 

(Rawpixel/Shutterstock)

With the forthcoming end of the contract, the future of these “ghost workers” remains uncertain. With the 40 percent drop in the company's share price, you would expect some of the Appen contractors to be let go. Appen is evaluating the financial impact of the contract termination and is expected to release a full financial report with more details on February 27th. 

The decision to terminate the contract by Google comes after the search engine giant announced layoffs in several departments. Some of the major players that have announced layoffs in 2024 include SAP, Wayfair, Amazon, and Unity. Some companies are calling their decision to lay off as “repositioning themselves for AI”. 

Interestingly, the tech layoffs have come at a time when investors are becoming increasingly bullish about the prospects of tech companies. The Nasdaq is at its highest since early 2022, and companies such as Alphabet and Microsoft are at their all-time high. 

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