Scale AI, the data-labelling startup, is cutting 200 full-time employees, or approximately 14 percent of its workforce, just weeks after Meta acquired a 49 percent nonvoting stake in the company for $14.8 billion.
Interim chief executive Jason Droege, who took over from founder Alexandr Wang following the deal, told employees in a memo that the company’s rapid expansion into generative AI had led to unnecessary layers of bureaucracy.
He said the layoffs are intended to make the organisation more agile and better able to respond to market changes and evolving customer demands.
He underlined that Scale AI is still well-funded and well-resourced in spite of the cuts.
“These changes will make us more nimble — enabling us to react more quickly to shifts in the market and customer needs,” Droege wrote in the memo. “This structure will allow us to better serve the customers we have today and win back customers that have slowed down work with us.”
Scale AI to increase headcount
Droege stated that Scale AI intends to “significantly increase headcount” throughout its application business units, including its enterprise, public sector, and international public sector divisions, in the second half of the year.
In order to establish its reputation, Scale AI, which was established in 2016, assisted Microsoft, Google, and OpenAI in preparing data for training sophisticated AI models.
However, its major alliances seem to be falling apart—OpenAI has been reducing its cooperation over the past 12 months, and Google is reportedly splitting ties with the company after Scale recently signed a deal with Meta, according to Reuters.
Meta’s acquisition of Scale AI
Meta on June 13 announced a $14.8 billion investment to acquire a 49 percent nonvoting stake in Scale AI, a startup specialising in human-labelled data for AI training, and hired its CEO, Alexandr Wang.
This deal valued Scale AI at $29 billion, doubling its previous valuation of $14 billion.
Following this announcement, Google, Scale AI’s largest customer, decided to end its partnership with the company due to concerns over Meta’s involvement.
Google had planned to spend about $200 million with Scale AI in 2025 for critical training data used in developing its Gemini AI model, a competitor to ChatGPT.
However, after Meta’s investment, Google began discussions with other data-labelling firms to transfer much of this workload.
This move reflects fears that Meta’s stake could expose sensitive research and proprietary information aboutf rival AI developers.