Scale AI lays off 14% staff after Meta's $14B investment
What's the story
Scale AI, a leading player in the artificial intelligence (AI) data industry, has announced major layoffs. The company is letting go of some 200 employees or nearly 14% of its workforce. This comes just a month after Meta invested $14.3 billion in Scale for a 49% stake and hired its CEO, Alexandr Wang, to head its new Superintelligence group. The layoff round also includes around 500 global contractors associated with the company.
Business model
Restructuring from 16 specialized groups to 5 focused ones
Scale AI specializes in data labeling for artificial intelligence. The company employs human workers, often from outside the US, to annotate data that companies like Google, OpenAI, and Anthropic use to train their AI models. Jason Droege, CEO of Scale AI, has announced a major restructuring of the company's generative AI business. The company will be reorganizing from 16 specialized pods to five focused ones: code, languages, experts, experimental, and audio.
Market adaptation
Changes necessary to address inefficiencies and redundancies says Droege
Droege explained that these changes were necessary as the company had ramped up its generative AI capacity too quickly over the past year. He admitted that this approach led to inefficiencies and redundancies, creating too many layers, excessive bureaucracy, and confusion about the team's mission. He also said shifts in market demand required them to re-examine their plans and refine their approach.
Growth strategy
Scale AI plans to hire hundreds in upcoming months
Despite the layoffs, Scale AI has plans to ramp up investment and hire hundreds of new employees in the second half of 2025. The company will focus on its Enterprise, Public Sector, and International Public Sector divisions. "We're streamlining our data business to help us move faster and deliver even better data solutions to our GenAI customers," said Joe Osborne, a spokesperson for Scale AI.