Meta in talks to invest nearly $10 billion in artificial intelligence startup Scale AI
(Bloomberg) -- Meta Platforms Inc. is in talks to make a multibillion-dollar investment into artificial intelligence startup Scale AI, according to people familiar with the matter.
The financing could exceed $10 billion in value, some of the people said, making it one of the largest private company funding events of all time.
The terms of the deal are not finalized and could still change, according to the people, who asked not to be identified discussing private information.
A representative for Scale did not immediately respond to requests for comment. Meta declined to comment.
Scale AI, whose customers include Microsoft Corp. and OpenAI, provides data labeling services to help companies train machine-learning models and has become a key beneficiary of the generative AI boom. The startup was last valued at about $14 billion in 2024, in a funding round that included backing from Meta and Microsoft. Earlier this year, Bloomberg reported that Scale was in talks for a tender offer that would value it at $25 billion.
This would be Meta's biggest ever external AI investment, and a rare move for the company. The social media giant has before now mostly depended on its in-house research, plus a more open development strategy, to make improvements in its AI technology. Meanwhile, Big Tech peers have invested heavily: Microsoft has put more than $13 billion into OpenAI while both Amazon.com Inc. and Alphabet Inc. have put billions into rival Anthropic.
Part of those companies' investments have been through credits to use their computing power. Meta doesn't have a cloud business, and it's unclear what format Meta's investment will take.
Chief Executive Officer Mark Zuckerberg has made AI Meta's top priority, and said in January that the company would spend as much as $65 billion on related projects this year.
The company's push includes an effort to make Llama the industry standard worldwide. Meta's AI chatbot — already available on Facebook, Instagram and WhatsApp — is used by 1 billion people per month.
Scale, co-founded in 2016 by CEO Alexandr Wang, has been growing quickly: The startup generated revenue of $870 million last year and expects sales to more than double to $2 billion in 2025, Bloomberg previously reported.
Scale plays a key role in making AI data available for companies. Because AI is only as good as the data that goes into it, Scale uses scads of contract workers to tidy up and tag images, text and other data that can then be used for AI training.
Scale and Meta share an interest in defense tech. Last week, Meta announced a new partnership with defense contractor Anduril Industries Inc. to develop products for the US military, including an AI-powered helmet with virtual and augmented reality features. Meta has also granted approval for US government agencies and defense contractors to use its AI models.
The company is already partnering with Scale on a program called Defense Llama — a version of Meta's Llama large language model intended for military use.
Scale has increasingly been working with the US government to develop AI for defense purposes. Earlier this year the startup said it won a contract with the Defense Department to work on AI agent technology. The company called the contract 'a significant milestone in military advancement.'
More stories like this are available on bloomberg.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
4 hours ago
- Mint
Hedge Funds Face California Rebuke Over Role in Wildfire Claims
(Bloomberg) -- Hedge funds are facing pushback in California as their bets tied to insurance claims stemming from the Los Angeles wildfires are attacked as unethical. The transactions in focus are tied to so-called subrogation claims, which hedge funds, private equity firms and other alternative investment managers have been buying from insurers over the past few months. Subrogation kicks in if a third party such as a utility is suspected of being responsible for losses covered by insurers. Hedge funds buying these claims from insurers are now under attack from the California Earthquake Authority, which is the administrator of the California Wildfire Fund. It has described such transactions as 'opportunistic, profit-driven investment speculation,' and says it's planning to take on 'hedge funds and other speculators' that it claims 'are actively seeking to profit from California's devastating wildfire catastrophes.' In practice, that means the authority will try to block the payout of what it says could end up being 'billions of dollars' to the investors that bought the claims, according to materials prepared ahead of a meeting that took place last month with the California Catastrophe Response Council, which oversees the fund. To that end, it plans to engage California's state legislature, according to a transcript of comments made during the meeting and seen by Bloomberg. A spokesperson for the authority declined to comment. Bradley Max, a director at Cherokee Acquisition, a New York-based investment bank that trades and invests in subrogation claims, says the development has 'put a chill on bidding,' which is already visible in pricing. Subrogation rights tied to the Eaton Fire that ripped through Southern California in January were trading as high as 50 cents on the dollar at one point, but have now dropped 'at least a few points lower,' Max said. Still, even though the political development has led to lower prices on the subrogation claims, it hasn't held back transactions, he said. Cherokee said in April it had brokered deals linked to the Los Angeles fires for 'larger, more sophisticated distressed debt hedge funds.' And by April 15, investment bank Oppenheimer & Co. Inc. had executed 10 transactions tied to the Eaton and Palisades fires totaling over $1 billion worth of recovery rights, Ronald Ryder, co-head of special assets at Oppenheimer, told the California Earthquake Authority. That includes over $125 million in claims traded in just one day, Ryder wrote. A spokesperson for Oppenheimer declined to comment. Cherokee didn't name the hedge funds for which it brokered deals. In an email to the California Earthquake Authority, Ryder said that as catastrophic weather events become 'more prevalent,' insurers are increasingly resorting to 'recovery subrogation in the secondary market to fortify the balance sheet.' There's a growing consensus that insurers can't cover the rising costs of weather-related catastrophes alone, especially as climate change fuels more extreme events. For that reason, the industry is looking for ways to shift part of its financial risk over to capital markets, with alternative asset managers often the only investor class willing to step in. Efforts to prevent investors from profiting from the subrogation claims they've bought represent 'a politically motivated attempt to not pay legitimate obligations,' Max at Cherokee said. They're 'trying to beat up deep-pocketed hedge funds, despite the ethical and legal implications,' he said. Recovery of subrogation claims is costly and can take years to play out, which is why insurers have started selling them in exchange for an upfront cash payment. The hedge funds buying them are betting that the recovery sum at the end of the process will exceed the amount they paid the insurer to buy the claim. The market for investing in subrogation claims is characterized by over-the-counter deals with little to no transparency. Subrogation deals had a seminal moment more than half a decade ago, when faulty power lines and equipment failures at California utility PG&E Corp. were blamed for wildfires in the state. Back then, hedge fund Baupost Group LLC purchased claims against PG&E worth $6.8 billion. Bloomberg has previously reported that Baupost may have generated an estimated $1 billion of profits. The California Wildfire Fund, which is administered by the state's Earthquake Authority and overseen by the California Catastrophe Response Council, was set up in 2019 to help reimburse claims arising from wildfires caused by utility companies. If hedge funds prevail in their subrogation claims, some of the money could end up coming from the California Wildfire Fund. The fund, which sits on about $13 billion in liquid assets, is partly capitalized by three utilities — San Diego Gas & Electric Co., Edison International's Southern California Edison and PG&E. While the cause of the January fires remains under investigation, it's already clear that the Eaton Fire started inside the service territory of Edison and therefore leaves the fund potentially exposed, the authority said. With current estimates for insured losses as high as $45 billion, the January Southern California wildfires are expected to be the costliest in US history, according to the California Earthquake Authority. The Earthquake Authority and Catastrophe Response Council are now reviewing claims and administration procedures as they take the matter to the state legislature. More stories like this are available on
Time of India
5 hours ago
- Time of India
Meta in talks for Scale AI investment that could top $10 billion
Meta Platforms Inc . is in talks to make a multibillion-dollar investment into artificial intelligence startup Scale AI , according to people familiar with the matter. The financing could exceed $10 billion in value, some of the people said, making it one of the largest private company funding events of all time. The terms of the deal are not finalised and could still change, according to the people, who asked not to be identified discussing private information. A representative for Scale did not immediately respond to requests for comment. Meta declined to comment. Scale AI, whose customers include Microsoft Corp. and OpenAI, provides data labeling services to help companies train machine-learning models and has become a key beneficiary of the generative AI boom. The startup was last valued at about $14 billion in 2024, in a funding round that included backing from Meta and Microsoft. Earlier this year, Bloomberg reported that Scale was in talks for a tender offer that would value it at $25 billion. This would be Meta's biggest ever external AI investment, and a rare move for the company. The social media giant has before now mostly depended on its in-house research, plus a more open development strategy, to make improvements in its AI technology. Meanwhile, Big Tech peers have invested heavily: Microsoft has put more than $13 billion into OpenAI while both Inc. and Alphabet Inc. have put billions into rival Anthropic. Part of those companies' investments have been through credits to use their computing power. Meta doesn't have a cloud business, and it's unclear what format Meta's investment will take. Chief Executive Officer Mark Zuckerberg has made AI Meta's top priority, and said in January that the company would spend as much as $65 billion on related projects this year. The company's push includes an effort to make Llama the industry standard worldwide. Meta's AI chatbot — already available on Facebook, Instagram and WhatsApp — is used by 1 billion people per month. Scale, co-founded in 2016 by CEO Alexandr Wang, has been growing quickly: The startup generated revenue of $870 million last year and expects sales to more than double to $2 billion in 2025, Bloomberg previously reported. Scale plays a key role in making AI data available for companies. Because AI is only as good as the data that goes into it, Scale uses scads of contract workers to tidy up and tag images, text and other data that can then be used for AI training. Scale and Meta share an interest in defense tech. Last week, Meta announced a new partnership with defense contractor Anduril Industries Inc. to develop products for the US military, including an AI-powered helmet with virtual and augmented reality features. Meta has also granted approval for US government agencies and defense contractors to use its AI models. The company is already partnering with Scale on a program called Defense Llama — a version of Meta's Llama large language model intended for military use. Scale has increasingly been working with the US government to develop AI for defense purposes. Earlier this year the startup said it won a contract with the Defense Department to work on AI agent technology. The company called the contract 'a significant milestone in military advancement.'
Time of India
6 hours ago
- Time of India
Jamie Dimon-led JPMorgan issues stern warning! Job hopping analysts to be fired; ‘if you accept a position with..'
Jamie Dimon has consistently voiced concerns about private equity firms attracting fresh finance graduates. Led by CEO Jamie Dimon, JPMorgan has issued a very stern warning to 'unethical' junior bankers who start looking at alternate job offers within 18 months of joining. A new letter, leaked on Litquidity's Instagram platform, warns the new recruits against job hopping. According to the letter, junior bankers securing alternative employment opportunities during their initial 18-month tenure risk immediate termination from JPMorgan amidst increasing competition for skilled professionals in Wall Street. The confidential correspondence to newly recruited JPMorgan analysts explicitly states that securing employment elsewhere would result in immediate dismissal from the bank, according to a New York Post report. What JPMorgan's letter says to new recruits "If you accept a position with another company before joining us or within your first 18 months, you will be provided notice and your employment with the firm will end," states the correspondence dated June 4, bearing signatures of JPMorgan's global banking co-heads Filippo Gori and John Simmons, the report said. The communication from both senior leaders emphasised that complete dedication and engagement are vital for achieving success in the investment banking analyst programme. Also Read | Donald Trump vs Elon Musk: Who has more to lose - US President or world's richest man? Stakes are high for both! The executives further stated that "missing any part of the training programme" might result in dismissal, whilst highlighting that "avoiding potential conflicts of interest is crucial to maintaining the trust and confidence our clients place in us." The leadership also announced a reduction in the timeline to attain associate position by six months, making it 2.5 years, aiming to retain exceptional talent. Whilst their correspondence did not explicitly reference private equity organisations, these firms have historically employed strategies to recruit junior banking professionals following their initial training period, the report said. Jamie Dimon's past warnings Jamie Dimon, the 69-year-old chief executive of JPMorgan, has consistently voiced concerns about private equity firms attracting fresh finance graduates with substantial salary packages that major US banks struggle to match. "I know a lot of you work at JPMorgan, you take a job at a private equity shop before you even start with us," Dimon had told a crowd of undergraduate business school students, terming it "unethical." During his address at Georgetown University's Psaros Center for Financial Markets and Policy in September, he expressed his disapproval, saying, "It puts us in a bad position, and it puts us in a conflicted position. You are already working for somewhere else, and you're dealing with highly confidential information from JPMorgan, and I just don't like it." Also Read | Will the Donald Trump administration be forced to give billions of dollars in tariff refunds? Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
