San Francisco – Scale AI is firing hundreds of employees from data-averaging businesses a month after Metaplatrolled US$14.3 billion (S$18.3 billion) into startups and hired a CEO.
The company plans to cut 200 full-time employees, about 14% of the global workforce and provide retirements, Scale spokesman Joe Osborne said it will halt work with 500 of its 500 global contractors on July 16.
The move aims to “simplify our data business and help us move faster,” Osborne said, adding a scale plan for staff in other areas, including corporate and government sales.
In a memo submitted to scale employees on July 16, interim CEO Jason Droege said the layoffs were the result of the data labeling business that brought too many people last year. It led to “too many layers, excessive bureaucracy, useless confusion about the mission of the team.”
Droege added that “changes in market demand” also contributed to the decision to restructure. Following its agreement with Meta, some of Scale's most prominent customers have phased out work with startups, including Openai and Alphabet's Google, according to reports from Bloomberg and others.
Founded in 2016, Scale was the most well-known name on the market to help label and annotate the data needed to build AI models. It generated approximately US$870 million in revenue in 2024 and forecast revenue in 2025 of US$2 billion, Bloomberg News reported in April.
In June, Meta completed an investment in the billion-dollar scale and acquired a 49% stake in the company. As part of the deal, co-founder Alexandr Wang left the startup to lead Meta's new Superintelligence Unit, part of the Facebook parent's multi-billion dollar investment, to keep up with AI development.
Despite its position as a market leader in providing the key ingredients needed to build AI models, scale faces an increase in rivals such as Turing, invisible technology, Labelbox and Uber technology. Some Scale's clients said that competitive services are surged from customers as they were worried that Meta would increase additional visibility into the AI development process.
Scale is one of several AI companies that saw key talent hired last year without acquiring it last year. Recently, Google signed a US$2.4 billion deal with AI coding startup Windsurf, employing a CEO and some of its top staff. The transaction raises the question of what happens to employees left after the CEO joins a large company. In the case of Windsurf, the startup was quickly purchased by another AI company. On a massive scale, the company plans to take advantage of the hearts of war, Doroge said.
“We are still a rich and funded company, and today's announcement will help us accelerate new investments and add resources if necessary,” he wrote in the note. Droege said the startup plans to hone the scope of its business signing data, focusing on projects related to coding, language and audio.
Osborne said the company plans to hire hundreds of people in the second half of 2025 for efforts such as creating custom AI applications and working with US government agencies (such as the Department of Defense). These portions of the business are currently raising the revenue figures of nine people, Doroge previously told Bloomberg. Bloomberg
