Scale AI, a San Francisco-based data-labelling and technology company, has implemented a significant reduction in its workforce following a multi-billion-dollar investment by Meta.
The company confirmed the layoff of 200 employees, which accounts for 14% of its staff. Additionally, it plans to terminate contracts with 500 global contractors.
This development comes in the wake of Meta’s acquisition of a 49% stake in Scale AI for $14.3bn, as reported by Bloomberg.
Interim CEO Jason Droege communicated the restructuring plans to employees, citing the need to address inefficiencies resulting from rapid expansion. In an internal email to staff, Droege stated that the company had expanded its GenAI capacity too rapidly over the past year.
This re-evaluation was prompted by shifts in market demand that necessitated a refined operational strategy.
The restructuring targets Scale AI’s GenAI division, which is involved in managing projects such as AI chatbots like xAI’s Grok and Google’s Gemini.
According to the email, affected employees have been advised against reporting to the office during this transition period. The company has ensured that departing staff will receive appropriate severance packages.
As part of the broader organisational changes, several high-ranking officials, including vice presidents and chiefs of staff, have exited the company following Meta’s investment. Despite these shifts, Scale AI claims to maintain a strong financial position and plans to expand its workforce in enterprise and public sector roles later this year.
Meta’s move to acquire a near-majority stake, albeit without voting rights, in Scale AI is aimed at enhancing its competitive edge against entities like OpenAI.
Former Scale AI CEO Alexandr Wang has transitioned to the role of chief AI officer at Meta and continues to serve on Scale AI’s board of directors. Meta is concurrently establishing Meta Superintelligence Labs as part of this collaboration.
Scale AI’s business model focuses on providing labelled datasets essential for training machine learning models. Its clientele includes major organisations such as Google, OpenAI, and Anthropic.
Recently, Scale AI secured a multi-million-dollar contract with the US Department of Defense, underscoring its role in delivering data solutions for military applications.
“Scale AI reduces workforce following Meta investment” was originally created and published by Verdict, a GlobalData owned brand.
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