Builder.ai, a startup backed by Microsoft, claimed its AI assistant could build apps simply by chatting with clients. The company marketed Natasha, its signature chatbot, as an AI-powered tool that would generate functional apps based on user input. However, it was later revealed that instead of relying on AI technology, Builder.ai employed around 700 engineers in India to impersonate Natasha in conversations and perform the actual coding work.
This human-run chatbot operation highlights a broader issue in the tech industry known as “AI-washing” — when companies exaggerate or falsely claim the extent of AI involvement in their products. For instance, Coca‑Cola’s 2023 launch of Y3000 Zero Sugar was touted as “co-created with AI,” but no concrete details were provided, leading many to suspect the claim was more about marketing hype than reality.
Public Skepticism About AI’s Impact
While tech companies push AI innovations, public opinion remains cautious. According to Pew Research Center, 43% of respondents believe AI will harm them, versus 24% who expect benefits. Furthermore, only 23% of U.S. adults foresee AI positively impacting their jobs over the next two decades, contrasting with 73% of AI experts who share that optimism. Another study found that about half of respondents preferred speaking to real people over AI chatbots, with just 12% favoring AI interactions.
Builder.ai’s troubles go beyond AI-washing. According to the Latin Times, the company faced a lender seizing $37 million after revealing its actual revenue of $50 million was far below the claimed $220 million. Linas Beliūnas of Zero Hash accused Builder.ai of fraud, stating it had no real AI and merely a team of developers pretending to write code as AI. A former employee has sued the company, and audits led to millions being seized. Builder.ai now owes Amazon $85 million and Microsoft $30 million for unpaid cloud services.
The startup has filed for bankruptcy proceedings in the UK, India, and the U.S. In a LinkedIn statement, Builder.ai said it would “appoint an administrator to manage the company’s affairs” due to historic financial strains.
What The Author Thinks
The Builder.ai case underscores the urgent need for transparency in AI claims. Overstating AI capabilities not only misleads consumers but also damages trust in genuine innovations. As AI continues to reshape industries, companies must be honest about what is human-driven and what is truly automated to maintain credibility and foster sustainable progress.
