Google opens a new tab. According to five people familiar with the situation who spoke to Media, Google, Scale AI’s biggest client, intends to sever its relationship with the company after learning that rival Meta, opens a new tab, is acquiring a 49% interest in the AI data-labeling business.
According to one of the individuals, Google had intended to pay Scale AI around $200 million this year for the human-labeled training data that is essential for creating technology, including the advanced AI models that underpin Gemini, its rival ChatGPT.
According to reports, the search engine giant has already spoken with a number of Scale AI’s competitors this week in an effort to transfer a large portion of that job.
Significant business loss for Scale coincides with Meta’s acquisition of a sizable share in the firm, which is valued at $29 billion. Prior to the transaction, Scale was valued at $14 billion.
Scale AI plans to continue operating while Alexandr Wang, its CEO, and a few staff members transfer to Meta. It may suffer a significant deal if it loses important clients like Google because its primary business is centered around a small number of clients.
A Scale AI representative stated in a statement that the company’s business, which includes working with governments and other corporations, is still robust because it is dedicated to preserving consumer data. The business refused to discuss information with Google.
According to insiders, Google paid about $150 million for Scale AI’s services last year, while the company made $870 million in 2024.
Microsoft, one of Scale’s other large tech clients, is opening a new tab and retreating as well. According to one of the sources, Elon Musk’s xAI is also trying to sell. Despite spending significantly less than Google, OpenAI chose to withdraw from Scale few months ago, according to people familiar with the situation. Scale AI is one of OpenAI’s several data providers, and the firm will continue to collaborate with them, the CFO announced on Friday.
According to five sources, businesses that compete with Meta in the development of advanced AI models are worried that working with Scale may reveal their research objectives and roadmap to a competition. Customers that use Scale AI frequently provide prototype goods and confidential data, for which Scale’s employees provide data-labeling services. AI businesses are worried that one of their main competitors may learn about their technological blueprints and commercial strategy now that Meta has a 49% interest.
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