AI Data Firm Sama Liquidates Amid Legal and Financial Pressures
The data annotation company is winding down operations following mounting litigation and revenue decline.
1Sama Initiates Asset Liquidation
The AI data annotation firm Sama is officially winding down operations and liquidating its assets. A letter sent to creditors on November 6 confirmed the decision, citing a significant decline in revenue. The company, formerly known as Samasource Impact Sourcing, Inc., is now transferring its remaining assets to a third-party entity.
2Financial Instability and Liabilities
An unaudited balance sheet dated October reveals a precarious financial position for the firm. Sama reported approximately $1 million in total assets against $17 million in liabilities. The company stated that a bank currently holds a priority claim to substantially all of these assets, leaving little for other potential creditors.
3Impact of Class-Action Litigation
The firm explicitly blamed recent class-action litigation for its financial distress, noting that defending these cases would require years of effort and significant resources. While the letter did not specify which lawsuits were the primary drivers, Sama has faced multiple legal challenges in both Kenya and the United States regarding labor practices.
4Labor Disputes in Kenya
Sama and Meta are currently facing consolidated lawsuits in Kenya involving former content moderators. Plaintiffs allege illegal termination, the suppression of unionization efforts, and violations of constitutional rights. Former employee Daniel Motaung, fired in 2019, claims these practices included forced labor and human trafficking, allegations which the company has consistently denied.
5Privacy Concerns Over Smart Glasses
Earlier this year, the company faced scrutiny regarding its work on Meta’s AI-powered smart glasses. Workers reported reviewing sensitive private content, including footage of individuals in intimate settings. Although Sama was initially named in privacy lawsuits alongside Meta and Luxottica, plaintiffs voluntarily dropped their claims against the firm in August.
6The Role of Sama ABC
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 the liquidation of insolvent firms. The letter clarifies that Sama ABC has no corporate affiliation with the original company, despite the similarity in their names.
7Legacy of Impact Sourcing
Despite its current collapse, the company highlights its history as a pioneer of impact sourcing. The firm claims to have provided technical training and high-wage employment to over seventy thousand individuals from marginalized communities in East Africa. This model aimed to create a material wealth ripple effect throughout the local regions.
8Uncertain Future for Legal Cases
The liquidation announcement leaves the status of ongoing legal proceedings in Kenya unclear. Representatives for Sama and the liquidation entity did not respond to requests for comment regarding the impact on these cases. The firm’s press inbox is currently bouncing emails, signaling a complete cessation of standard corporate communications and operations.
Original article: Time — AI Data Firm Sama Liquidates Amid Legal and Financial Pressures