Google considers dumping Scale AI after Meta acquires nearly half of its shares

(Dan Tri) - Meta has just bought nearly half of Scale AI - a data partner of many technology giants. Google, the company's largest customer, immediately considered withdrawing due to concerns about sensitive data being leaked.

Billion Dollar Handshake Makes Google “Turn Around”

Alphabet, Google's parent company, is planning to cut ties with Scale AI, a start-up that labels data for AI training, after Meta announced it would take a 49% stake in the company, five inside sources told Reuters.

Google had planned to spend around $200 million this year on Scale’s data services, specifically to train advanced AI models like Gemini, ChatGPT’s direct competitor. But shortly after the Meta-Scale deal was announced, Google quickly approached a number of Scale competitors to offload sensitive workloads.

Other big names like Microsoft, Elon Musk’s xAI, and even OpenAI, despite spending less, are also pulling out of Scale or looking for alternatives. Part of the reason comes from concerns that with Meta holding nearly half the company, technical secrets, product data, and AI development strategies could be accidentally leaked to competitors.

Scale CEO Alexandr Wang himself and several key staff are leaving the company to join Meta, where he will lead its AI operations, one of the sources said. Before Meta jumped in, Scale was valued at around $14 billion. After the deal, that figure skyrocketed to $29 billion.

Alphabet - Google's parent company - is planning to cut ties with Scale AI, a startup that specializes in labeling data for AI training, after Meta announced it would hold a 49% stake here (Photo: Reuters).

The trust crisis of “AI data gatekeepers”

Scale AI is considered a key link in the global AI development chain. The company provides data labeling services by humans, from experts, scientists to PhDs, to help AI models learn better. These deep examples can cost up to $100 per label, but are an important factor in helping AI models become smarter and more accurate.

In 2024, Scale AI is expected to generate around $870 million in revenue, with Google alone spending $150 million on contracts. In addition to tech companies, Scale also provides services to self-driving businesses and the US government , a group of customers that are expected to continue to cooperate, given the low conflict of interest with Meta.

But Scale’s biggest source of revenue comes from generative AI companies—a group that’s more sensitive than ever to the risk of being exposed. Data labeling contracts often require suppliers to share prototypes, internal documents, and proprietary data—things that no competitor wants to hand over to Meta.

Google has been quietly looking to diversify its data partners for more than a year. But Meta’s move into Scale was the final straw, prompting the company to pull all sensitive contracts from the startup. Because labeling contracts are often structured in a flexible manner, the withdrawal process can happen quite quickly.

Rivals benefit, Scale faces survival challenge

In the immediate aftermath of the Meta-Scale deal, a number of Scale’s competitors saw demand surge. Labelbox said it could earn hundreds of millions of dollars in new revenue by the end of the year, thanks to a wave of customers fleeing Scale.

Handshake, a startup that builds networks of experts, said its AI labs’ workload tripled overnight, while another competitor, Turing, stressed that “neutrality is no longer an option, it’s a necessity.”

Many AI labs are also looking to hire in-house labeling teams to ensure data is kept secure. Mercor, which offers a similar service to Scale and helps AI labs recruit and automate the review process, says it has seen a surge in demand from customers who want to “own their data.”

While Scale AI said in a statement that it continues to work with major corporations and governments and is committed to protecting customer data, the company declined to comment on the specific situation with Google. Meanwhile, Google, Microsoft, and OpenAI also chose to remain silent when asked by Reuters, while xAI did not respond.

The deal between Meta and Scale AI is more than just an investment or a business partnership. It exposes a new reality in the global AI race: data is no longer simply the “fuel” for intelligent models but is becoming a strategic weapon that determines victory or defeat between technology giants.

Source: https://dantri.com.vn/kinh-doanh/google-tinh-dut-ao-voi-scale-ai-sau-khi-meta-thau-tom-gan-nua-co-phan-20250614143947238.htm