AI Data Firm Sama Liquidates Amid Legal Challenges
The data annotation company cites declining revenue and mounting litigation costs for its closure.
1Company Ceases Operations
The AI data annotation firm Sama is winding down operations and liquidating its assets. A letter sent to creditors on November 6 confirmed the decision, citing declining revenues and the burden of ongoing class-action litigation. The company, formerly known as Samasource Impact Sourcing, Inc., is now moving toward a formal dissolution process.
2Financial Instability Revealed
An unaudited balance sheet dated October shows a stark financial imbalance for the organization. Sama reported approximately $1 million in total assets against $17 million in liabilities. This significant deficit highlights the severe fiscal pressure the company faced, ultimately forcing it to seek professional liquidation services to manage its remaining obligations.
3Legal Pressures Mount
Sama has faced multiple legal challenges in both Kenya and the United States. These include allegations of forced labor, human trafficking, and the illegal suppression of unionization efforts. Former employees have specifically accused the firm of exposing workers to traumatic content without providing adequate safeguards or maintaining fair working conditions during employment.
4The Motaung Case Impact
A prominent lawsuit brought by former moderator Daniel Motaung remains a central point of contention. Motaung, fired in 2019 for organizing a strike, sued Sama and Meta for constitutional rights violations. This case has since been consolidated with other petitions from moderators who allege they were unlawfully made redundant and blacklisted by the firm.
5Privacy Concerns and Scrutiny
Earlier this year, Sama faced intense criticism regarding its work on Meta’s AI-powered smart glasses. Workers reported reviewing private footage, including intimate moments, to improve product performance. While Sama was initially named in privacy lawsuits alongside Meta and Luxottica, plaintiffs voluntarily dropped their claims against the company in August of this year.
6Asset Transfer Mechanism
On October 23, the U.S. entity transferred its assets to a newly formed company called Sama ABC. This entity is managed by professionals specializing in liquidating distressed firms for creditor benefit. The letter clarifies that Sama ABC is not corporately affiliated with the original company despite the similarity in their business names.
7Legacy of Impact Sourcing
The company’s leadership maintains that Sama leaves behind a significant legacy in impact sourcing. By hiring individuals from marginalized communities in East Africa, the firm claims to have trained and employed over seventy thousand people. They argue this model created a positive wealth ripple effect throughout the local communities it served.
8Uncertain Future for Litigation
The liquidation process leaves the status of ongoing legal cases in Kenya unclear. A bank currently holds a priority claim to substantially all of the company's remaining assets. Neither Sama’s CEO, Wendy Gonzalez, nor representatives from Sama ABC have provided further comment regarding the implications of this closure for the pending lawsuits.
Original article: TIME — AI Data Firm Sama Liquidates Amid Legal Challenges