Google is reportedly cutting ties with Scale AI following Meta's acquisition of a 49% stake in the data-labelling startup. Google, previously Scale AI's largest customer, had planned to spend $200 million this year on Scale AI's services, which are crucial for training AI models like Gemini. However, Google executives are now concerned about potential data exposure to Meta, a direct competitor in the AI space. Google has already started discussions with Scale AI's rivals to shift its workload. Microsoft and Elon Musk's xAI are also reportedly considering reducing their collaboration with Scale AI. OpenAI decided to pull back from Scale several months ago.
Scale AI's business model relies on a few key customers, making it vulnerable to losing major clients like Google. In 2024, Scale AI generated $870 million in revenue, with Google contributing approximately $150 million. The departure of Google and potentially others could significantly impact Scale AI's financial trajectory. Scale AI intends to keep its business running while its CEO, Alexandr Wang, along with a few employees, move over to Meta. A Scale AI spokesperson stated that its business remains strong and that it is committed to protecting customer data but declined to comment on specifics with Google.
Industry experts suggest that Meta's investment in Scale AI has created a conflict of interest, making it difficult for other tech companies to trust Scale AI with their sensitive data. This situation highlights the importance of data neutrality in the AI industry, as companies seek to protect their proprietary information and maintain control over their AI pipelines. The shift could benefit Scale AI's competitors, as companies look for alternative data-labelling providers.
