A startup asserted that its AI assistant could develop an app for you, but in reality, human engineers accomplished the task. Builder.ai, backed by Microsoft, positioned itself as an AI-enabled solution for effortless app creation. Clients engaged with the platform’s AI assistant, Natasha, to obtain an app tailored to their specifications. Nevertheless, rather than AI technology overseeing the chatbot and app development, the firm hired 700 engineers in India to impersonate Natasha during client interactions and execute the actual coding.
This human-driven chatbot strategy underscores a wider concern in the tech sector referred to as “AI-washing,” where firms inflate the degree of AI involvement in their products. This phenomenon is frequent, as illustrated when Coca‑Cola asserted that its 2023 product Y3000 Zero Sugar was co-created with AI, yet provided no details regarding AI’s involvement, raising doubts that the assertion was simply a marketing ploy.
As organizations hasten to embed AI into their offerings—or at least project that they are doing so—consumers may not share the tech industry’s zeal for AI. The Pew Research Center indicates that 43% of participants believe AI will be detrimental to them, in contrast to 24% who perceive advantages. Furthermore, public optimism regarding AI’s effect on employment is minimal; while 73% of AI specialists foresee a positive impact on jobs over the next two decades, only 23% of U.S. adults concur. Another study revealed that approximately half of respondents would rather converse with a human than AI, with merely 12% preferring AI chatbots, and a quarter stating it depends on the context.
However, AI-washing was not the factor that caused Builder.ai’s demise. As reported by the Latin Times, a lender confiscated $37 million from the company upon discovering it registered only $50 million in revenue, significantly lower than its $220 million claim. Linas Beliūnas of Zero Hash accused Builder.ai of fraud in a LinkedIn post, stating: “It turns out the company had no AI and instead was just a group of Indian developers pretending to write code as AI.” A former employee sued the company, according to Business Standard. An audit seized millions from the firm, which now owes Amazon $85 million and Microsoft $30 million for outstanding cloud services.
The company has filed for bankruptcy in the UK, India, and the U.S. In a LinkedIn announcement, Builder.ai declared it would “enter into insolvency proceedings and appoint an administrator to manage the company’s affairs.”
“Despite the relentless efforts of our current team and investigating every possible avenue, the business has been unable to recover from historical challenges and previous decisions that imposed considerable strain on its financial situation,” the LinkedIn message revealed.