Google cuts off an $83 million ghost labor contract Outsourced...

Google cuts off an $83 million ghost labor contract
Outsourced workers are the first to go when the company looks to reduce costs.
Russell Brandom1 February 2024

It’s been a season of tech layoffs, and the collapse in digital ad rates has hit Google particularly hard. Last January saw 12,000 jobs cut, and already this year there have been more painful cuts and restructuring — although the total number of layoffs is still unclear. But one cut stood out in particular, ending the company’s $82.8 million contract with the outsourcing firm Appen, which provided search raters to test the quality of Google Search.

Appen isn’t a household name, but the company’s global reach and flexibility have made it a prominent source for AI training data. Annotating data for a large language model is similar work to rating the outputs of Google Search, serving as the human in the loop of a mostly automated process — so it makes sense that the same workers often serve both purposes. In both cases, it tends to be badly paid and precarious work.

Appen, which makes more than 20% of its revenue from the contract, seems to have been caught off guard by the cancellation, describing the decision as “unexpected and disappointing” in a public statement.

But for seasoned Google-watchers, the end of the contract shouldn’t have come as a complete surprise. All of last year, the company said it was taking a hard look at vendor contracts, as part of its general cost-cutting efforts. As Sundar Pichai put it on an earnings call in April, the company would be “managing our spend with suppliers and vendors more effectively.” With Appen, that meant cutting off work entirely.

The bigger question is how Google plans to replace the Appen workers. On the same call, Pichai said Alphabet would be “using AI and automation to improve productivity,” and some have already jumped to the conclusion that AI will be filling in the gaps. But Google has plenty of other search-rater contracts that haven’t been canceled (at least not yet), and the company has privately suggested that other suppliers will take Appen’s place.

More broadly, Search is one of the company’s most important products, and the search raters aren’t that expensive compared to the untold billions Google makes on Search ads. As Search Engine Land’s Barry Schwartz told me, “I still think Google wants humans to evaluate if the AI is working on it.”

The simpler explanation is that Appen had just gotten too expensive, and Google saw a chance to turn an $82 million budget line into an $81 million budget line. The move comes just a year after search raters at Appen got a contract-wide raise to $14.50 an hour — the result of internal lobbying from the Alphabet Workers Union. The rising hype around AI has led to a rush of competitors like Scale AI, eager to tempt away clients with lower rates and more flexible working terms.

But the incident is also a sober reminder of how labor works in today’s tech industry. Google Search is one of the oldest products we have from this generation of algorithmic systems. For decades, it’s been staffed by a combination of well-paid engineers and invisible contract workers. As economic conditions shift and companies move to reduce costs, the contract workers are an easy place to cut, either by lowering output or discontinuing the contract entirely. Thousands of miles from Mountain View, they have no way to leverage the company. All end users will see is the same Search bar.