Alphabet Ends Partnership with AI Firm Appen Amid Internal Criticism

Published January 24, 2024

In a startling development, Alphabet Inc., the parent company of Google, has terminated its longstanding contract with Appen, an Australian company specializing in training artificial intelligence systems. This revelation comes shortly after reports that Google's own employees have expressed concerns about the perceived lack of direction in the company's leadership.

Decoupling from Appen

Alphabet's move to sever ties with Appen is poised to have a significant impact on both entities, particularly as Appen has been a substantial partner responsible for nearly a third of its revenue. The decision will come into effect on March 19, following what was described by CNBC as a strategic review by Alphabet, led by CEO Sundar Pichai. The repercussions of this separation may lead to the displacement of about two thousand subcontracted workers associated with Alphabet, a concern raised by the Alphabet Workers Union.

Appen has played an integral role in the development of Google's new chatbot Bard and in fine-tuning the results of Google Search. Surprisingly, Appen was reportedly caught unawares by Alphabet's decision.

Appen's Stand in the Tech Industry

With a history stretching back over two decades, Appen has forged a strong client base that includes heavyweight tech companies like Microsoft Corporation, Apple Inc., Meta Platforms Inc., and, Inc., with these giants accounting for a vast majority of Appen's earnings. In the previous year, Alphabet contributed a significant $82.8 million to Appen's sales. Yet, despite such prestigious partnerships, Appen is grappling with an array of issues, including client losses, executive departures, and a troubling 30% slump in revenue in 2023.

Challenges and Directional Shifts

Confidential sources, former employees who opted to stay unnamed, aired their grievances last September, claiming that Appen's struggles to adapt to generative AI technology could be attributed to longstanding issues with quality control and organizational disarray.

The separation from Appen hints at Alphabet's increased focus on fostering its proprietary AI technology. December last year saw the launch of Gemini AI, Google’s most advanced AI model to date, which was integrated with Bard. Alongside this, Google revealed a new AI-enabled game allowing users to generate images based on text prompts. Concurrently, Alphabet is also embroiled in a $7 billion lawsuit defending its AI technology against accusations of patent infringement.

Alphabet, Appen, AI