OpenAI and Google Cut Ties with Scale AI Following Meta's $14.3 Billion Investment

OpenAI drops Scale AI as a data provider following Meta deal | TechCrunch

Sarah Friar, the chief financial officer of OpenAI, previously suggested the company would continue its work with Scale AI. Now, it appears OpenAI has changed its tone. OpenAI said it was already winding down its work with Scale AI ahead of Meta's announcement last week that it was investing billions of dollars in the startup and bringing on CEO Alexandr Wang. An OpenAI spokesperson told Bloomberg that OpenAI had been seeking other providers for more specialized data to develop increasingly advanced AI models. OpenAI's decision to cut ties raises questions about Scale AI's core data labelling business. Last week, Reuters reported that Google was discussing plans to drop Scale AI as a data provider as well. As rumors swirled about Meta's deal with Wang, some of Scale AI's competitors said they received an influx of interest from AI model providers looking for "neutral" partners. In a blog post published Wednesday, Scale AI's general counsel tried to squash the idea that Meta would receive preferential treatment following this deal. Scale AI's executives said it would not share confidential information from other customers with Meta, and that Wang would not be involved in day-to-day operations. Despite those claims, it seems that Scale AI's biggest customers are already pivoting away from the data provider -- meaning the startup may have no choice but to change up its business. In a separate blog post published on Wednesday, Scale AI's interim CEO Jason Droege said the company would "double down" on its applications business, which involves building custom AI applications for governments and enterprises.

OpenAI Is Phasing Out Scale AI Work Following Startup's Meta Deal

OpenAI is phasing out the work it does with data-labeling startup Scale AI, cutting ties with the company days after Meta Platforms Inc. invested billions of dollars in it and hired its founder. Scale accounted for a small fraction of OpenAI's overall data needs, according to an OpenAI spokesperson who confirmed the firm's decision to phase out work with the company. The ChatGPT maker was already in the process of winding down its reliance on Scale before Meta, an OpenAI competitor, took a 49% stake in the firm, the spokesperson said, adding that OpenAI had been seeking other providers for more specialized data needed to support increasingly advanced artificial intelligence models.

Scale AI Rivals See Customer Demand Surge After Meta Investment

Alex Ratner was trying to get in a few hours of work after putting his kids to bed when news broke that Meta Platforms Inc. planned to invest billions of dollars in data-labeling startup Scale AI. Within minutes, Ratner, who runs a rival company called Snorkel AI, began fielding calls from his board about the chance to pick up clients worried about Scale's independence. Then came the inquiries from possible customers -- dozens of them, he said, resulting in "tens of millions of dollars" in potential deals at various stages of completion over the past week. "Every responsible LLM developer is going to be making a lot of moves to diversify their vendor portfolio," Ratner said, using an acronym for large language models. "There will be some major shifts and major openings."

OpenAI is winding down its work with Scale AI, whose founder is joining Meta

Scale is best known for its work helping major tech companies, including OpenAI, prepare data they use to train cutting-edge AI models. But OpenAI has been pulling back from the startup over the last six to 12 months, according to an OpenAI spokesperson. OpenAI has been looking to work with other data providers that have kept pace with innovation and understand what the latest models need, the spokesperson said. OpenAI's decision to wrap up its work with Scale AI wasn't influenced by the Meta partnership, the spokesperson said. Bloomberg first reported that OpenAI is phasing out its relationship with Scale. Scale AI did not immediately respond to CNBC's request for comment. Meta is investing $14.3 billion into Scale and will have a 49% stake in the startup. But Meta will not have any voting power at the company, a Scale AI spokesperson told CNBC earlier this month. Scale AI's founder Alexandr Wang told employees in a memo that he's leaving for Meta and will be joined by a small number of employees as part of the agreement. Scale AI is promoting Jason Droege, the chief strategy officer, to the CEO role. Meta's big bet on Wang is CEO Mark Zuckerberg's latest effort to bolster his company's AI development amid fierce competition from OpenAI and Google parent Alphabet. OpenAI CEO Sam Altman said on the latest episode of the "Uncapped" podcast, which is hosted by his brother, that Meta has tried to poach OpenAI employees by offering signing bonuses as high as $100 million with even larger annual compensation packages. Meta has been pouring billions of dollars into AI in recent years, but Zuckerberg has been frustrated with the company's progress, particularly as the latest version of its flagship Llama AI models received a lukewarm response. Scale AI previously said that Meta's investment and hiring of Wang will not impact the startup's customers, and that Meta will not be privy to any of its business information or data.

Scale AI not 'winding down' following Meta deal, interim CEO tells employees and customers

"Unlike some other recent tech deals you might have heard about in the AI space, this is not a pivot or a winding down," Droege wrote in a post directed at customers, employees and investors. Meta has a 49% stake in Scale after its $14.3 billion investment, though the social media company will not have any voting power. Scale AI's founder Alexandr Wang, along with a small number of other Scale employees, will join Meta as part of the agreement. "Scale remains, unequivocally, an independent company," Droege wrote. "This deal rewards many of the people who helped build Scale into what it is today, but more importantly to me, it's also a validation of the course we're on." Scale AI appointed Droege, the company's chief strategy officer, to serve as its interim chief executive following the deal. Droege wrote that Scale AI is still "a well-resourced company" that has "multiple promising lines of business." Founded in 2016, Scale AI rose to prominence by helping major tech companies like OpenAI, Google and Microsoft prepare data they use to train cutting-edge AI models. Meta has been one of Scale AI's biggest customers. Droege said the company is "not slowing down" and remains committed to its data and application business units. Scale will also continue to be model agnostic, he added. "The need for high-quality data for AI models remains significant, and with the largest network of experts training AI, we are set up well to help model builders keep pushing the frontier of what's possible," Droege wrote. But some of Scale AI's tech customers may be having doubts. OpenAI confirmed to CNBC on Wednesday that it has been wrapping up its work with Scale AI over the past six to 12 months. The company said it's looking to work with other data providers that have kept pace with innovation, and that its decision to wind down its work with Scale wasn't influenced by the Meta partnership. Google is also reportedly cutting ties with Scale following the company's deal with Meta, according to a report from Reuters. Google declined to comment.

Meta just ate Google's lunch by purchasing a 49% stake in Scale AI

Scale AI is on a mission to provide leading AI developers with human-annotated training data that mitigates the missteps inherent to large-scale models. Over a year ago, Google invested at least $120 million to leverage the company's work into a faster, more reliable Gemini LLM. An additional $200 million worth of training data remained on the table for further development this year. That's all changed now, though, after Meta announced opening a 49% stake in the up-and-coming data provider. The deal roughly doubles Scale AI's value to $29 billion -- which is a lot of money and market power -- but that might not be the investment's biggest effect. In addition to forcing Google to cut ties with the data provider, the investment has sent ripples through the development industry, causing AI leaders to rethink what companies they partner with. Related 4 reasons you should turn off Gemini AI training if you're interested in maintaining privacy Use Gemini on your terms Posts The curse of success Pick your battles -- and allies -- carefully Source: Pixabay More consumers than ever understand how critical data privacy and security are to personal and financial well-being. Corporations know it even more intimately. Closely guarded secrets are the lifeblood of cutting-edge tech development, after all, and nearly no amount of money can make up for a competitor gaining access to trade secrets. That's why Scale AI's massive, multi-billion-dollar partnership with global tech giant Meta has sent competitors running for the hills. Unlike OpenAI enlisting Google's powerful supercomputers to run its models, sharing data annotation services like Scale AI worries companies leading the AI charge. As one Nasdaq analyst described, Google "continuing to work with Scale AI would be like Ford letting GM's top engineers and strategists walk around its secret R&D facility for next-generation vehicles." A schism in the church of AI Get ready for Meta AI to get better. Sources told Reuters Google has already begun seeking a replacement for the company's powerful services. It's not the only Scale AI customer with that mindset, either, as both Microsoft and xAI are reportedly testing the waters with alternatives. The industry shakeup comes after OpenAI began phasing out its reliance on Scale AI months ago, according to insider sources. Now that Scale's CEO will shift to working for Meta, competitors worry they can't rely on the annotation startup to keep everyone's best interests at heart. Companies that compete with Meta in developing cutting-edge AI models are concerned that doing business with Scale could expose their research priorities and road map to a rival, five sources said. -- Reuters Scale does work with outfits outside consumer-facing AI development, such as self-driving automotive developers and US government interests, and plans to continue doing so. But Meta's near-takeover of the increasingly in-demand field's current leader provides opportunities for Scale AI's rivals to take a piece of the pie. Scale alternatives, including Labelbox and Handshake, are already fielding or anticipate seeing a huge surge in demand as AI companies look for their own personal data-annotation partner. As Jonathan Siddharth, Turing CEO, explains, "The Meta-Scale deal marks a turning point. Leading AI labs are realizing neutrality is no longer optional, it's essential." In addition to Meta gaining increasingly exclusive access to advanced, human-reviewed datasets, the high-dollar deal benefits Scale AI investors, who are sure to be excited about the new $29 billion valuation. Related What is open data? How Common Crawl and LAION shape open source AI training Accessible AI training tools for researchers Posts

OpenAI is phasing out Scale AI work following startup's Meta deal

Scale accounted for a small fraction of OpenAI's overall data needs, according to an OpenAI spokesperson who confirmed the firm's decision to phase out work with the company. The ChatGPT maker was already in the process of winding down its reliance on Scale before Meta, an OpenAI competitor, took a 49% stake in the firm, the spokesperson said, adding that OpenAI had been seeking other providers for more specialized data needed to support increasingly advanced artificial intelligence models. OpenAI's plans inject new uncertainty into Scale's business in the wake of Meta's unusual deal. Meta is investing $14.3 billion in Scale and has poached the startup's chief executive officer, Alexandr Wang, for a new so-called "superintelligence" unit, focused on building a more powerful, and hypothetical, form of AI software. Other Scale employees are expected to follow Wang to Meta to work on AI. A Scale AI spokesperson declined to comment. Founded in 2016, Scale signed up prominent customers, including Alphabet Inc.'s Google, Meta and OpenAI, providing them with the data needed to build AI models. However, Meta's deal with Scale raised concerns that the social-media company may gain new visibility into its rivals' AI development efforts. Google plans to cut ties with Scale, Reuters reported, citing unnamed people familiar with the matter. Right after the Meta deal was announced, OpenAI Chief Financial Officer Sarah Friar had signaled that the company intended to keep working with Scale. "We don't want to ice the ecosystem because acquisitions are going to happen," Friar said at the VivaTech conference in Paris last week. Over the past six to 12 months, however, OpenAI had determined that Scale was not the best fit for it because the AI developer needed more data expertise than Scale could provide, the OpenAI spokesperson said. OpenAI has shifted to building more advanced AI models that can mimic the process of human reasoning, as well as agent-like models that can carry out tasks with limited input from users. Forbes previously reported OpenAI had been winding down its Scale work for months. Scale initially focused on working with an army of contractors to do the grunt work of labeling text and images for earlier AI systems. Scale has gradually enlisted better-paid contractors with doctorates, nursing and other advanced degrees to help develop more sophisticated models. Despite those efforts, OpenAI has increasingly relied on other data providers, including newer entrants like Mercor, according to a person familiar with the matter who asked not to be identified because the information is private. Mercor was previously known for using AI for recruiting tech employees, but now focuses on finding experts to help AI companies develop more advanced models.

OpenAI cuts ties with Scale AI amid data labeler's new Meta deal -- Report

OpenAI is dropping Scale AI from its data labeling suppliers days after the startup's acquisition by Meta. OpenAI is scaling back its contracts with Scale AI, a data labeling startup recently acquired by social media giant Meta. According to a Thursday report from Bloomberg, the ChatGPT maker is winding down its reliance on the startup's data, a few days after Meta announced a $14.8 billion deal for a 49% ownership stake in Scale AI. The acquisition was Meta's second-largest and will also have Scale CEO Alexandr Wang joining Meta's experimental AI project. The companies announced the deal on June 12. Scale AI supplies labeled data used to train and improve artificial intelligence (AI) models. The startup, founded in 2016 and backed by over 100 investors, is a supplier to popular AI companies including Anthropic, Cohere and Adept. According to PitchBook, it raised $100 million in a Series C round in 2019. Another company reportedly phasing out contracts with Scale is Google. According to Reuters, the move is backed by concerns that the deal could grant Meta insights into competitors' AI developments. Related: Elon Musk's AI firm xAI faces lawsuit over data center air pollution Related: Amazon to invest $13B in Australian AI data center infrastructure An OpenAI spokesperson told Bloomberg the company started phasing out its contracts with Scale over the past year, seeking more specialized data for its AI models. The startup accounted for a small portion of OpenAI's data needs. In a statement about the deal, Scale interim CEO Jason Droege said that the startup "remains, unequivocally, an independent company," adding that "nothing has changed about our commitment to protecting customer data." OpenAI is now betting on alternative data suppliers for its operations, including newcomers in the sector such as Mercor. According to Bloomberg, Scale initially hired "an army of contractors" to label images and text for early AI systems over the past few years. Later, the company moved to hire more educated contractors to aid in the development of sophisticated AI models.

Google may cut ties with Scale AI after Meta's $14.3B stake

Google reportedly intends to sever its relationship with Scale AI, potentially influenced by Meta's significant investment in the AI startup. The move follows similar reported decisions by Microsoft and OpenAI. Reuters reports that Google had planned to pay Scale AI $200 million this year. Google is now reportedly in discussions with Scale AI's competitors. According to Reuters, Microsoft is also considering reducing its reliance on Scale AI. OpenAI previously made a comparable decision, although its CFO stated the company would continue utilizing Scale AI as one of multiple vendors. Scale AI's clientele encompasses self-driving car companies and the U.S. government. Reuters identifies generative AI companies as Scale AI's largest clients, seeking specialized workers for data annotation to train AI models. Google has declined to comment on these reports. A Scale AI spokesperson declined to comment on the specifics of the company's relationship with Google. The spokesperson told TechCrunch that Scale AI's business remains strong and that it will operate as an independent entity, protecting its customers' data. Earlier reports indicate that Meta invested $14.3 billion in Scale AI, acquiring a 49% stake. Following this investment, Scale AI CEO Alexandr Wang joined Meta to lead the company's superintelligence development efforts.

OpenAI is phasing out Scale AI work following startup's Meta deal

OpenAI is phasing out its work with Scale AI, citing a need for more specialized data providers to support advanced AI models. The decision, already underway before Meta's $14.3 billion investment in Scale, adds uncertainty to Scale's business as rivals like Google also cut ties.OpenAI is phasing out the work it does with data-labeling startup Scale AI, cutting ties with the company days after Meta Platforms Inc. invested billions of dollars in it and hired its founder. Scale accounted for a small fraction of OpenAI's overall data needs, according to an OpenAI spokesperson who confirmed the firm's decision to phase out work with the company. The ChatGPT maker was already in the process of winding down its reliance on Scale before Meta, an OpenAI competitor, took a 49% stake in the firm, the spokesperson said, adding that OpenAI had been seeking other providers for more specialized data needed to support increasingly advanced artificial intelligence models. OpenAI's plans inject new uncertainty into Scale's business in the wake of Meta's unusual deal. Meta is investing $14.3 billion in Scale and has poached the startup's chief executive officer, Alexandr Wang, for a new so-called "superintelligence" unit, focused on building a more powerful, and hypothetical, form of AI software. Other Scale employees are expected to follow Wang to Meta to work on AI.A Scale AI spokesperson declined to comment. Founded in 2016, Scale signed up prominent customers, including Alphabet Inc.'s Google, Meta and OpenAI, providing them with the data needed to build AI models. However, Meta's deal with Scale raised concerns that the social-media company may gain new visibility into its rivals' AI development efforts. Google plans to cut ties with Scale, Reuters reported, citing unnamed people familiar with the matter. Right after the Meta deal was announced, OpenAI Chief Financial Officer Sarah Friar had signaled that the company intended to keep working with Scale. "We don't want to ice the ecosystem because acquisitions are going to happen," Friar said at the VivaTech conference in Paris last week. Over the past six to 12 months, however, OpenAI had determined that Scale was not the best fit for it because the AI developer needed more data expertise than Scale could provide, the OpenAI spokesperson said. OpenAI has shifted to building more advanced AI models that can mimic the process of human reasoning, as well as agent-like models that can carry out tasks with limited input from users. Forbes previously reported OpenAI had been winding down its Scale work for months.Scale initially focused on working with an army of contractors to do the grunt work of labeling text and images for earlier AI systems. Scale has gradually enlisted better-paid contractors with doctorates, nursing and other advanced degrees to help develop more sophisticated models. Despite those efforts, OpenAI has increasingly relied on other data providers, including newer entrants like Mercor, according to a person familiar with the matter who asked not to be identified because the information is private. Mercor was previously known for using AI for recruiting tech employees, but now focuses on finding experts to help AI companies develop more advanced models.

Meta's Scale AI deal to cost latter big clients, including Google and Microsoft

Google and other big tech companies are rethinking their ties with Scale AI. This follows Meta's significant investment in the data-labeling startup. Concerns arise that Meta could gain insights into rivals' AI strategies. Google plans to shift work away from Scale. OpenAI will continue working with Scale as one of many suppliers.Several clients of artificial intelligence (AI) startup Scale AI, including its biggest client, Google, are planning to end their relationship with the company after Meta acquired a 49% stake, according to Reuters. The deal, which values the data-labelling startup at $29 billion, has sparked concerns among other major customers as well, including Microsoft, ChatGPT-maker OpenAI, and Elon Musk's AI startup, xAI. Why are tech firms worried? Scale AI provides data services to many AI labs. With Meta now a significant investor, it could gain an inside view of its rivals' data strategies -- a key ingredient in training powerful AI models. This has raised alarms among companies competing with Meta, as they fear that continuing to work with Scale might expose sensitive data and give Meta a competitive edge. Google had planned to pay Scale AI around $200 million this year for human-labelled data, which is crucial to train AI models such as those used in its Gemini system. However, it is now shifting much of that work away from Scale. OpenAI also scaled back its use of the company months ago, according to Reuters, though it had spent far less than Google. Still, OpenAI's CFO, Sarah Friar, said that the company will continue to work with Scale AI as one of many suppliers. "We don't want to ice the ecosystem because acquisitions are going to happen," she said. "And if we ice each other out, I think we're actually going to slow the pace of innovation." Despite these concerns, a Scale AI spokesperson said the company's business remains strong and that it is committed to keeping customer data secure. Meta-Scale AI deal Meta's investment of $14.3 billion in Scale AI boosts the startup's valuation to over $29 billion, up from $14 billion before the deal. This deal is considered an 'acquihire', to bring on board employees from the acquired company. Scale's CEO, Alexandr Wang, will move to Meta to lead its efforts in building "superintelligence", while chief strategy officer Jason Droege will take over as interim CEO. Despite the optimism shown by Scale AI, losing major clients such as Google could deal a serious blow to Scale's business and long-term growth.

Google, Microsoft, Elon Musk's xAI Reportedly Cut Ties With Scale AI After Mark Zuckerberg's Meta Buys Stake - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

Alphabet Inc.'s GOOGL GOOG Google is planning to end its business relationship with Scale AI after its rival, Mark Zuckerberg's Meta Platforms Inc. META, acquired a 49% stake in the AI data-labeling startup. What Happened: Google, the most significant customer of Scale AI, is reportedly looking to sever ties with the company, Reuters reported. Google was expected to pay Scale AI approximately $200 million this year for human-labeled training data, which is crucial for advancing technologies like its ChatGPT rival, Gemini. However, the tech giant has already initiated discussions with Scale AI's competitors, signaling a shift in its workload allocation. The Meta deal, which values Scale AI at $29 billion, has led to significant business loss for the startup. Scale AI's CEO, Alexandr Wang, is set to join Meta along alongside other employees, while the company plans to continue its operations. Scale AI, which reported revenues of $870 million in 2024, may face a significant impact due to the loss of key customers, such as Google. Other major tech companies, including Microsoft Corporation MSFT and Elon Musk's xAI, are also reportedly distancing themselves from Scale AI. Google, Microsoft, xAI and Scale AI did not immediately respond to Benzinga's request for comment. SEE ALSO: Elon Musk Sounds Alarm Over International Space Station, Says It Should Be De-Orbited 'Within 2 Years' Why It Matters: The investment by Meta in Scale AI, which valued the company at $29 billion, was one of the largest private funding rounds in tech history. Scale AI plays a crucial role in the AI supply chain, providing high-quality labeled data for AI models. Today's Best Finance Deals The partnership with Meta was seen as a strategic move to accelerate AI development. However, the acquisition has raised concerns about the potential exposure of research priorities and roadmaps to Meta, a chief rival for many AI companies. This has led to key customers like Google and Microsoft distancing themselves from Scale AI, potentially impacting the startup's business significantly. Concerns have been raised about the potential exposure of research priorities and roadmaps to Meta, a chief rival for many AI companies, due to the sharing of proprietary data with Scale AI. According to Benzinga Edge Stock Rankings, Alphabet has a growth score of 88.42% and a momentum rating of 38.18%. Click here to see how it compares to other leading tech companies. On a year-to-date basis, Alphabet stock declined 7.74%, according to data from Benzinga Pro. READ MORE: Bitcoin, Ethereum, XRP, Dogecoin Drop Further -- Traders Eye Weekend Rally Before Retest Of $100K Lows Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. GOOGAlphabet Inc$175.60-0.16%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum38.10Growth88.34Quality85.24Value51.44Price TrendShortMediumLongOverviewGOOGLAlphabet Inc$174.56-0.06%METAMeta Platforms Inc$682.55-0.05%MSFTMicrosoft Corp$474.18-0.16%Market News and Data brought to you by Benzinga APIs

OpenAI Winds Down Involvement With Scale AI | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. Scale provided only a small fraction of the data needed by OpenAI, and the companies' relationship was already winding down over the past six to 12 months as OpenAI sought different sorts of data from other suppliers, Bloomberg reported Wednesday (June 18), citing an OpenAI spokesperson. The OpenAI spokesperson's confirmation of the move came days after Meta took a 49% stake in Scale and hired its founder, Alexandr Wang, to join Meta's new "superintelligence" unit, according to the report. While Scale has provided data to both Meta and OpenAI, the deal raised concerns that Meta would be able to access information about rival companies' artificial intelligence (AI) development efforts, the report said. Scale announced in a June 12 press release that it received a "significant investment" from Meta, that the companies' agreement will "substantially expand" their commercial relationship, and that Wang will join Meta while also continuing to serve as a director on Scale's board of directors. The company said in the release: "Scale remains an independent leader in AI, committed to providing industry-leading AI solutions and safeguarding customer data. Having played a pivotal role in accelerating AI development from its inception, Scale will continue to partner with leading AI labs, multinational enterprises and governments to deliver expert data and technology solutions through every phase of AI's evolution." It was reported June 8 that Meta was weighing a multibillion-dollar investment in Scale that would be the company's largest-ever outside expenditure on AI and a rare move for a company that has largely depended on internal research. Scale's data labeling services help businesses train machine learning models, and the company has been a crucial beneficiary of the generative AI boom. It was reported Wednesday that OpenAI CEO Sam Altman accused Meta of making "giant offers" of $100 million to poach OpenAI workers as Meta tries to catch up in the AI race. "I've heard that Meta thinks of us as their biggest competitor," Altman said.

How Meta's $14.3B Scale AI investment triggers shake-up as Google, OpenAI cut ties with the startup, founded by world's youngest self-made billionaire Alexandr Wang - VnExpress International

Meta's US$14.3 billion investment in Scale AI and poaching of founder Alexandr Wang, world's youngest self-made billionaire, has sparked a shake-up as major clients like Google and OpenAI move to phase out work with the startup. Meta, an OpenAI competitor, will take a 49% nonvoting stake in Scale and bring Wang on board to head its new "superintelligence" unit, which aims to develop next-generation artificial intelligence systems. Wang will remain a director on the board of the startup, which he founded in 2016. Scale specializes in providing labeled or curated training data for developing advanced AI models like OpenAI's ChatGPT. The deal, which valued Scale at $29 billion, marks a win both for Meta, which has been considered to be trailing behind in the AI race, and for Wang, 28, who is poised to become one of the most influential figures in the field. But the benefits are less clear for Scale as aligning itself with Meta has prompted some of its biggest clients to reevaluate their projects with the startup. Just hours after Meta announced the deal last week, Google said it would sever ties with the firm and had even held talks with rival providers, Reuters reported. The tech giant, Scale's top client, poured $150 million into Scale's services in 2024 and had previously planned to spend $200 million this year for its human-labeled training data. OpenAI, meanwhile, is winding down its contracts with Scale, cutting ties just days after the announcement, according to Bloomberg. While the company said it was already reducing its reliance on the startup before the deal, with Scale now handling only a small portion of OpenAI's data-labeling work, the move highlights new challenges for Scale. Initially hiring a large pool of contractors to perform basic data labeling for early AI systems, Scale has since shifted toward working with more highly trained specialists, including those with doctorates and other advanced degrees, to adapt to the growing complexity of newer models. This places it in an increasingly crowded and competitive market as rivals such as Turing, Invisible Technologies, Labelbox and Uber Technologies have emerged to meet the growing demand for data. Since news of the Meta deal broke, several of these companies have reported a surge in interest from customers uneasy about Meta gaining more visibility into their AI development process. "The last week has been completely insane," Jonathan Siddharth, CEO of Turing, told TIME magazine, adding that his firm has secured $50 million in potential contracts over the last two weeks "as frontier labs recognize that advancing AGI requires truly neutral partners." Garrett Lord, CEO of Handshake, another Scale competitor, said his company saw demand triple "overnight" following the Meta deal. "If you're General Motors or Toyota, you don't want your competitors coming into your manufacturing plant and seeing how you run your processes," he noted. The deal also caught many employees at Scale off guard. A former employee told Forbes that teams were left confused and scrambling, adding that some expressed concerns about what kind of access Meta might gain to past projects, even though most contracts require that data be deleted upon completion. "This was great for Alex and early investors, terrible for everyone else including employees and former employees," a former senior Scale employee said. "Unclear how the deal helps Scale." Scale's newly appointed interim CEO Jason Droege reassured customers, employees and investors in a Wednesday post that the company is not pivoting or scaling back operations, CNBC reported. "Scale remains, unequivocally, an independent company," Droege wrote. "This deal rewards many of the people who helped build Scale into what it is today, but more importantly to me, it's also a validation of the course we're on." Still, for many Scale contractors, the impact of the Meta investment has been immediate. Several said their dashboards were either empty or showing much fewer available projects after a number of projects tied to Meta's AI rivals were paused. "Work has been extremely scarce for most of us, and now it may have dried up almost completely," one contractor who had previously been involved in Google-related tasks told Business Insider. Another reported losing access to multiple projects overnight after they were previously shown as inactive or on hold on the contractor's dashboard. Three others working on Xylophone projects for Elon Musk's xAI said their works had been put on ice since the Meta deal was announced. "I have been told that there are no projects for my specialty or location," one of them said. "The fact that there's nothing else to work on right now just sucks," another added. The uncertainty is also spooking some investors. One smaller shareholder said they planned to sell off their remaining stake in Scale, citing doubts that Meta's backing could offset the departure of big tech clients. The investor also expressed skepticism about how the startup could still command a $29 billion valuation now that major partners like Google are pulling back.