Appens biggest issue is US National Security and Geopolitical bias

There is no chance the CIA will allow Appen to source AI data to both China and Big tech and Vice Versa for US based companies providing data to China.

AI data business is bigger and more important than the market is leading one to believe.

Data sovereignty and security concerns: Although Appen is an Australian company, U.S.–China tech tensions create an atmosphere of caution. Over the past few years the U.S. government has enacted new data-security rules (e.g. DOJ rules effective 2025 prohibiting transfers of sensitive U.S. personal data to China-linked entitiesdavispolk.com). In this environment, U.S. firms and regulators increasingly emphasize data localization and “trusted” supply chainscarnegieendowment.orgdavispolk.com. While Appen’s revenue drops have not been explicitly attributed to these policies, some analysts suggest that U.S. companies may now prefer vendors without Chinese affiliations. Appen has responded by bolstering security compliance: e.g. in 2024 it upgraded its operations in China, the Philippines and the UK to ISO 27001:2022 information-security certificationdata-api.marketindex.com.au, and highlighted its secure data-handling processes. However, any risk aversion among U.S. clients could have made Appen’s China-linked projects less attractive compared to purely domestic providers.

Geopolitical bias in sourcing: There is anecdotal evidence of a “geopolitical bias” in corporate sourcing: Chinese tech firms tend to favor local or allied data providers, and vice versa. Appen’s success in China may partly reflect strong local demand and the company’s Chinese-language offeringsappen.comannualreports.com, whereas U.S. firms may be more cautious (or investing heavily in their own programs). Some U.S. tech executives have publicly noted national security risks from Chinese tech, and legislators have tightened export controls on AI software. While no public statement pins Appen’s losses on geopolitics, the timing of U.S. contract terminations coincides with rising U.S.-China tech friction.