Scale AI is facing backlash after Meta bought a 49% stake in the startup for $15 billion. CEO Alexandr Wang is leaving to lead a new AI lab at Meta. The deal has some of Scale’s biggest clients, including OpenAI, pulling back.
The worry: Scale handles sensitive data for top AI labs. Now, nearly half owned by Meta, there’s fear data might leak to the social media giant. A former Scale employee told Forbes:
“They all want to cut Scale off now. Scale as a business, once it becomes part of Meta, entirely collapses.”
Four sources say OpenAI has been quietly scaling down its relationship with Scale for months while exploring alternatives. OpenAI declined to comment. Scale initially stayed silent but later denied OpenAI has reduced spending.
Competitors are ready to pounce. Mercor CEO Brendan Foody said:
“We’re already seeing a huge influx of demand from customers that are phasing out of Scale AI.”
Turing aims to be the neutral middleman for data training, serving OpenAI, Anthropic, and Google. Invisible Technologies vows to remain independent.
Scale has cornered the AI data-labeling market with $870 million expected revenue in 2024. But Meta’s stake threatens client trust. The startup’s overseas workforce handles massive data labeling, but that work is turning into a commodity, making quality and neutrality more critical.
A former Scale employee criticized the startup’s service:
“They overpromise and they oversell, and then they underdeliver very often.”
Wang, 28, one of the youngest billionaires, is moving to Meta to pursue “superintelligence” — AI surpassing human capabilities. Bloomberg reports Mark Zuckerberg is aggressively recruiting top AI talent with million-dollar offers, even reorganizing Meta’s offices to keep them close.
The deal is still pending regulatory approval. A former senior Scale employee told Forbes:
“This was great for Alex and early investors, terrible for everyone else including employees and former employees. Unclear how the deal helps Scale.”
Meta is struggling to catch Google and OpenAI in AI, and acquiring Scale’s CEO could boost Meta’s efforts. The company also plans to push into defense contracts, where Scale’s government work might fit — despite previous struggles.
This follows a trend of big tech poaching AI startup founders. Microsoft snatched DeepMind co-founder Mustafa Suleyman. Amazon hired Adept’s CEO and Google re-hired researcher Noam Shazeer from Character.AI.
Invisible CEO Matt Fitzpatrick highlighted the importance of skilled workers in AI training going forward:
“This is a 10-year bet that this is going to be really important for a long time.”
Scale AI spokesperson Joe Osborne called the negative reporting “fueled by smaller competitors,” denying OpenAI has cut spending.
The full story is still unfolding. But the Meta-Scale deal is already shaking up the AI data-labeling landscape.
