The startup that fooled Microsoft goes bankrupt: 700 Indian engineers posed as AI

Builder.ai, a London-based startup once valued at $1.5 billion and backed by Microsoft and Qatar's sovereign wealth fund, has filed for bankruptcy protection after it emerged that its supposedly artificial intelligence (AI)-powered platform was actually a manual operation carried out by around 700 engineers in India.

The AI ​​craze is a reality, and just like the internet, the arrival of this new technology sparked a global revolution, with those who rode the wave becoming very wealthy. Just look at the Forbes list of the world's largest fortunes to see that the vast majority are dedicated to the technology sector.

That's why all AI projects that stand out or are groundbreaking attract the attention of the bigwigs, and Builder.ai stood out for its virtual assistant "Natasha," an AI solution capable of developing applications automatically, easily, and without human intervention, promising customers that they could order software "like ordering a pizza."

One of the biggest frauds in the history of AI

However, this fraud was uncovered after one of the lenders, Viola Credit, which extended $50 million to Builder.ai in 2023, seized $37 million after the company breached its obligations. The withdrawal of these funds reportedly crippled the startup's ability to operate normally or pay employees.

Apparently, customer requests weren't sent to any AI, but instead were handed off to a legion of 700 Indian engineers who performed the operations manually. "The 'AI-written' apps constantly crashed, the code was unreadable, functions didn't work... in general, everything was like real artificial intelligence," notes Bernhard Engelbrecht, founder of Ebern Finance.