Alphabet Severs Ties with Australian AI Firm, Impacting Bard and Google Search: Here’s why

Alphabet Inc., the parent company of tech giant Google, has officially cut ties with an Australian artificial intelligence (AI) firm that played a pivotal role in training two of the company’s groundbreaking technologies—Bard and Google Search.

A who’s who of Silicon Valley giants, including Microsoft, Nvidia, Meta, Apple, Adobe, Google, and Amazon, has benefited from Appen’s assistance in training AI models too.

Appen was not notified of the contractual end, which was a “strategically planned process” from Alphabet. This decision will take effect after March 19.

Since Alphabet generated over one-third of Appen’s revenue, the move to sever ties will affect “at least two thousand subcontracted Alphabet workers,” the Alphabet Workers Union said in a statement on Monday.

As to the report on Monday, Appen’s revenue for the year 2023 amounted to $273 million, of which $82.8 million came from its collaboration with Alphabet.

Despite it’s 30-year long history, Appen’s revenue dropped 30% in 2023. The company’s current challenge to transition to generative AI, according to former workers who spoke to CNBC in September but asked not to be identified for fear of reprisal, is the result of years of lax quality standards and a fractured organizational structure.

In the past, there have been disagreements between Google and Appen, namely around pay. Google said in 2019 that its contractors will have to pay its employees $15 per hour. Several employees claimed in open letters that Appen did not fulfill that condition.

After months of planning, increases for Appen freelancers working on the Bard chatbot and other Google products took effect in January 2023. The hourly rates increased to $14 to $14.50.

However, labor disputes remained. The U.S. National Labor Relations Board filed accusations against Appen in June after it was said that he fired six independent contractors for vocally expressing dissatisfaction with working conditions. The employees eventually had their jobs back. 

In its filing on Monday, Appen stated that its priorities will be cost control, business turnaround, and high-quality AI data delivery to clients.

“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.