Alexandr Wang, CEO of Scale AI, addressed the media on CNBC’s Squawk Box during the World Economic Forum in Davos, Switzerland, on January 23, 2025. Reports indicate that Alphabet’s Google, Scale AI’s largest client, intends to sever its relationship with the AI data-labeling startup after rival Meta announced its acquisition of a 49% share in the company, according to five sources familiar with the situation who spoke to Reuters.
Google was set to invest approximately $200 million in Scale AI for critical human-labeled training data essential for developing advanced technologies, including Gemini, its competitor to ChatGPT, one source revealed. In light of the recent developments, Google has begun discussions with other companies in Scale AI’s competitive landscape this week as it aims to redistribute much of that workload.
The potential loss of substantial business comes as Meta’s investment values Scale AI at $29 billion, a significant rise from its previous worth of $14 billion. Although Scale AI plans to continue operations, CEO Alexandr Wang and several of the company’s employees are expected to shift to Meta. With Scale AI’s client base heavily reliant on a select few companies, the loss of a significant client like Google could pose serious challenges.
A spokesperson for Scale AI emphasized that the firm’s business remains robust, serving a wide range of major corporations and governmental entities while ensuring the protection of customer data. The spokesperson refrained from commenting specifically on the relationship with Google.
In 2024, Scale AI reported revenues of $870 million, with Google spending about $150 million on its services the previous year. It appears that other prominent tech clients, including Microsoft, are also distancing themselves from Scale AI. Additionally, Elon Musk’s xAI is reportedly considering ending its partnership, according to one source. OpenAI, while having reduced its collaborations with Scale in recent months, still spends considerably less than Google and plans to maintain its relationship, as stated by its CFO on Friday.
Companies competing with Meta in the AI realm have expressed concerns that collaborating with Scale AI may inadvertently reveal their research objectives and strategies to a competitor. This apprehension arises from the nature of the business relationship, which often involves sharing proprietary data and prototype products with Scale’s workforce for data-labeling purposes. With Meta’s significant stake, AI firms worry that their key rival might gain insight into their operational tactics and technological advancements.
As references go, Google, Microsoft, and OpenAI opted not to comment on the situation, while xAI did not respond to requests for feedback.
