(Bloomberg) — Scale AI is laying off hundreds of employees from its data-labeling business, one month after Meta Platforms Inc. invested $14.3 billion in the startup and hired away its chief executive officer.
Most Read from Bloomberg
The company cut 200 full-time employees, about 14% of its global workforce, and will provide severance, Scale spokesperson Joe Osborne said Wednesday. Scale will also stop working with 500 of its thousands of global contractors, he said.
The move is aimed at “streamlining our data business to help us move faster,” Osborne said, adding that Scale plans to staff up in other areas including enterprise and government sales. In a note sent to Scale employees on Wednesday, interim CEO Jason Droege said the layoffs were a result of the data labeling business bringing in too many people too quickly over the last year. That led to “too many layers, excessive bureaucracy, and unhelpful confusion about the team’s mission,” Droege wrote in the memo, which was viewed by Bloomberg News.
Droege added that “shifts in market demand” also contributed to the decision to restructure. Following the deal with Meta, some of Scale’s most prominent customers have phased out work with the startup — including OpenAI and Alphabet Inc.’s Google — according to reports from Bloomberg and others.
Founded in 2016, Scale has long been the best-known name in the market for helping tech firms label and annotate the data needed to build artificial intelligence models. It generated about $870 million in revenue in 2024 and expects $2 billion in revenue this year, Bloomberg News reported in April. In June, Meta finalized its multibillion-dollar investment in Scale, taking a 49% stake in the company. As part of the deal, co-founder Alexandr Wang left the startup to lead a new superintelligence unit at Meta, part of the Facebook parent company’s multibillion-dollar investment to catch up on AI development.
Despite its position as a leader in the market for providing a key ingredient needed for building AI models, Scale faces a growing raft of rivals including Turing, Invisible Technologies, Labelbox, and Uber Technologies Inc., all of which also offer services to meet AI developers’ bottomless need for data. As some of Scale’s clients worried about Meta getting added visibility into their AI development process, competing services have said they’ve seen a surge in interest from customers.
Story continues