American data processing companies collectively generate approximately $500 million per year from China’s six leading artificial intelligence firms. These same firms simultaneously provide data annotation services to the Pentagon, creating a potential conflict with US technology restriction policies. Their revenues are substantial: Surge AI reported $1.2 billion in 2024, while Mercor is expected to reach an annualized run rate of $2 billion by June 2026. The annotated data, critical for training AI systems, is primarily purchased by ByteDance, Alibaba, Ant Group and Tencent. This situation highlights a significant regulatory gap: unlike chip export controls, no equivalent restriction governs the trade in annotated training data.
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