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 of rival AI developers.
Industry reaction and client shifts after Meta’s Scale AI deal
Google is not alone in reconsidering its relationship with Scale AI. Microsoft and Elon Musk’s xAI are reportedly pulling back from the startup. Despite reducing its engagement months earlier, OpenAI confirmed it will continue working with Scale AI as one of multiple data suppliers. Other AI companies worry that Meta’s involvement might grant it insights into their research strategies, given Scale AI’s role in labelling proprietary datasets.
Scale AI’s business relies heavily on a few major clients, so losing Google and others could have a profound impact. The company reported $870 million in revenue in 2024, mainly from charging AI model creators for access to expert human annotators. These annotations can be costly, sometimes up to $100 each, reflecting the high specialisation required.
The CEO of Turing, a competitor, said, “The Meta-Scale deal marks a turning point. Leading AI labs are realising neutrality is no longer optional; it’s essential.” Other competitors like Labelbox and Handshake have seen a surge in demand as clients seek alternatives. Some AI labs are considering building in-house data-labeling teams to protect their data.
Meanwhile, Scale AI plans to continue operations despite the CEO and some employees moving to Meta. Meta sees the deal as a strategic move to boost its AI capabilities and catch up with rivals in the AI race.
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