Building a large AI model today can cost hundreds of millions of dollars, with predictions that it could reach staggering billions of dollars within a few years. Much of that cost is in the computing power of specialized chips (typically Nvidia GPUs), which can cost tens of thousands of them, costing $30,000 each.
But companies training AI models or tweaking existing models to improve performance for specific tasks also struggle with another often-overlooked cost: data labeling, the painstaking process of training generative AI models with tagged data so they can recognize and interpret patterns.
For example, data labeling has been used for years to develop AI models for self-driving cars: cameras capture images of pedestrians, road signs, cars, and traffic lights, and human annotators label the images with words like “pedestrian,” “truck,” and “stop sign.” This labor-intensive process has also raised ethical concerns. After releasing ChatGPT in 2022, OpenAI was widely criticized for outsourcing data labeling work that helped make chatbots less harmful for Kenyans who earn less than $2 an hour.
Today’s general-purpose large-scale language models (LLMs) go through a data labeling effort called reinforcement learning human feedback, where humans provide qualitative feedback and rankings on what the model produces. This is one of the major drivers of rising costs, as is the effort required to label any personal data that companies want to incorporate into AI models, such as customer information or internal company data.
Additionally, highly technical and specialized data labeling is driving up costs in fields like law, finance, and healthcare, as some companies hire expensive doctors, lawyers, PhDs, and scientists to label certain data, or outsource the work to third-party companies like Scale AI, which recently secured a staggering $1 billion in funding after its CEO predicted significant revenue growth by the end of the year.
“You need a lawyer to put a label on it. [which is] “This is a waste of legal time,” said William Falcon, CEO of AI development platform Lightning AI. “Anything that carries a significant risk” requires expert-level labeling, he explained. “Chatting with your ‘virtual BFF’ doesn’t carry a significant risk, but providing legal advice does.”
Alex Ratner, CEO of data-labeling startup Snorkel AI, said enterprise customers can spend millions of dollars on data labeling and other data-related tasks, wasting time and 80% of their AI budgets, adding that over time, data also needs to be re-labeled to keep it up to date.
Matt Schumer, CEO and co-founder of AI assistant startup Otherside AI, agreed that fine-tuning L.M. programs has become costly. “Over the last few years, we’ve gone from middle school level data being sufficient to high school, college, and now professional level data,” he said. “And it’s certainly not cheap.”
That can be a budget headache for tech startups operating in a critical sector like healthcare. Neil Shah, CEO of elderly caregiver platform CareYaYa, which received a grant from Johns Hopkins University to develop “the world’s first AI caregiver trainer for dementia patients,” said the cost of data labeling “has been killing us.” The cost has skyrocketed 40% in the past year, he said, because it requires expert input from gerontologists, dementia experts and veteran caregivers. He’s working to reduce the cost by asking healthcare students and professors to label the data.
Bob Rogers, CEO of Oii.ai, a data science company that specializes in supply chain modeling, said he has seen data labeling projects that cost millions of dollars. He said a platform like BeeKeeper AI can reduce costs by allowing multiple companies to share experts, data and algorithms without exposing their private data to others.
Kjell Carlsson, head of AI strategy at Domino Data Lab, added that some companies are reducing costs by at least partially automating data collection and labeling using “synthetic” data, i.e. data generated by the AI itself. In some cases, the models can fully automate data labeling. For example, biopharmaceutical companies are training generative AI models to develop synthetic proteins for conditions such as colon cancer, diabetes and heart disease. Companies automatically run experiments based on the output of generative AI models that provide new training data that comes with labels.
But in the end, while data labeling may be costly and time-consuming, it’s well worth it. “Data labeling is hard work,” says CareYaYa’s Shah, “but the payoff is huge.”
Sharon Goldman
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Newsworthy
DeepMind Military Protest. About 200 DeepMind staffers are calling for Google’s AI division to stop working with the military. time The letter to management reportedly says Google’s cloud business is violating the company’s rules by selling AI to military forces at war. It does not name any names, but links to reports about Google’s dealings with the Israeli military and (allegedly) Israeli arms companies. Google claims that only Israeli government ministries use its cloud services, and not for “military workloads related to weapons or intelligence.”
China’s Amazon route. Reuters reports that Chinese government agencies are using Amazon’s cloud services to access the kind of advanced chips and AI that U.S. export controls are trying to keep out of China. U.S. regulations prohibit the export or transfer of advanced chips and AI software to Chinese agencies, but allow access via the cloud. Amazon Web Services says it’s not violating any rules.
Cruise + Uber. GM’s Cruise robotaxi unit is trying to bounce back from a serious setback, signing a deal with Uber to provide self-driving services in U.S. cities. Financial Times Uber reportedly already has a similar deal with Alphabet’s Waymo for a robotaxi service in Phoenix, but Cruise does not currently offer a self-driving service and is still testing cars with human drivers after a long hiatus following the death of a pedestrian in San Francisco.
Our Feed
“There are some interesting use cases, but overall it seems like a lot of caution is needed on this front, especially in larger enterprises with complex permissions like SharePoint and Office 365. Copilot basically proactively summarises information that you may technically have access to but shouldn’t have access to.”
—Jack Berkowitz, Chief Data Officer, Security He told the Register that half of the companies he surveyed had paused deployments of Microsoft Copilot, an AI assistant that has come under fire for accessing unnecessary company data.
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Before you leave
Jelly Pong. Scientists have successfully taught a “soft, sticky, water-rich gel” how to play vintage video games. Pong, Guardian The report said that although the hydrogel is not sentient, it does have a memory and can improve at the game over time. Pong It’s the same player as another system that was unveiled a few years ago, based on a bunch of neurons in a dish. Delightfully, that system was named DishBrain.
