How Facebook parent Meta's investment in Scale AI may be a ‘problem' for the startup's employees
Artificial intelligence (AI) startup, Scale AI, is cutting 200 full-time employees, which represents 14% of the company's global workforce, a report claims. Apart from this, the company is also ending contracts with 500 contractors. This decision comes weeks after
Meta
invested $14.3 billion in the company and hired its founder, Alexandr Wang. Before these reductions, Scale AI had a global workforce of 1,400 people. In a statement to CNBC, Scale AI spokesperson
Joe Osborne
confirmed the layoffs and noted that affected employees have been provided severance packages.
'We're streamlining our data business to help us move faster and deliver even better data solutions to our GenAI customers. We also plan to make significant investments and hiring across our enterprise and government AI businesses,'
Osborne told CNBC.
Recently, Meta has been engaged in a major AI hiring effort to improve its competitive position against rivals like OpenAI and Google. As part of this push, Meta CEO
Mark Zuckerberg
selected Scale AI founder Alexandr Wang to serve as Meta's chief AI officer, who is set to oversee the new Meta Superintelligence Labs organisation. A small number of Scale AI employees have also joined Meta during this period.
What Scale AI's interim CEO Jason Droege said about the job cuts
by Taboola
by Taboola
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In a recent memo to employees (seen by CNBC), Scale AI's interim CEO Jason Droege, who stepped in for Wang, admitted that the startup expanded its generative AI capabilities
'too quickly'
and built up
'excessive bureaucracy.'
He also noted that Scale AI is still a well-resourced and well-funded company despite the job cuts.
'These changes will make us more nimble, enabling us to react more quickly to shifts in the market and customer needs. This structure will allow us to better serve the customers we have today and win back customers that have slowed down work with us,'
Droege wrote in the memo.
Droege also noted that Scale AI plans to
'significantly increase headcount'
in the second half of the year across its app business units, including the enterprise, public sector, and international public sector divisions.
'I want to extend our deepest gratitude for their valuable contributions and dedication to our company,' referring to the employees who are being laid off Droege said in the memo.
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