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Google and Scale AI Are Breaking Up After Meta Steps In

Google, which was Scale AI’s biggest customer, is planning to cut ties with the company after Meta announced it’s buying a big piece of Scale. Meta is taking a 49% non-voting stake in the startup, in a deal said to be worth about $14 to $15 billion. This isn’t just any business deal. Scale AI provides human-labeled data that’s crucial for training large AI models. Google has spent around $200 million with Scale AI for this type of data. But now that Meta is involved, Google is not comfortable continuing the relationship. It’s worried Meta might get access to sensitive or strategic info.

And Google isn’t alone. Other top AI companies like Microsoft, OpenAI, and xAI are also pulling back. Everyone wants to make sure their data isn’t sitting in a platform owned by a competitor. With all these customers leaving, Scale AI might be in trouble. Even though its valuation jumped to $29 billion after the Meta deal, losing clients like Google could hit its business hard. 

Meanwhile, Meta just gained a big advantage. Not only did it invest in Scale, but Scale’s CEO Alexandr Wang is also joining Meta’s team to help lead its AI efforts.

On the flip side, competing labeling startups like Labelbox, Mercor, and Handshake are now seeing a flood of new interest as companies look for alternative data partners. This situation shows how much control over AI data really matters. Tech giants are starting to treat training data as a core asset they want to fully control, not something to outsource to a company that could be influenced by a rival.

It also raises questions about fairness and competition. Some U.S. lawmakers are already calling for regulators to take a closer look at Meta’s move.