Scale AI lays off 14% of staff following Meta's $14.3 bn investment

Data infrastructure startup Scale AI is undergoing a major shake-up, laying off 200 employees - around 14% of its full-time staff - and severing contracts with 500 global contractors, according to a Bloomberg report.

The job cuts come just a month after Meta hired Scale AI's CEO Alexandr Wang in a $14.3 billion deal, raising questions about the startup's future direction.

Also Read: OpenAI cuts ties with Scale AI after Meta partnership

In a memo to employees obtained by Bloomberg, interim CEO Jason Droege acknowledged that the company had "overextended" its core business of data labelling, which had powered many of the world's top AI models by supplying structured training data.

According to the report, Droege wrote, "We scaled too quickly," adding that that the company now plans to prioritize enterprise and government sales, marking a notable pivot from its initial product-focused roots.

The staffing cuts also follow a broader trend among AI startups like Inflection AI, which was recently reverse-acqui-hired by Microsoft. In Scale AI's case, Meta's investment seems to have prompted several major customers to pull back, impacting the startup's core business line.

Founded in 2016, Scale AI was once at the heart of the data-labelling boom, helping companies build AI models with annotated datasets.

Also Read: Google to sever ties with Scale AI following Meta's significant stake

Also Read: Scale AI's Alexandr Wang to join Meta's superintelligence mission; Jason Dorege to be interim CEO of startup