Latest news with #Scale
CNBC
16 hours ago
- Business
- CNBC
Google, Scale AI's largest customer, plans split after Meta deal, sources say
Alphabet's Google, the largest customer of Scale AI, plans to cut ties with Scale after news broke that rival Meta is taking a 49% stake in the AI data-labeling startup, five sources familiar with the matter told Reuters. Google had planned to pay Scale AI about $200 million this year for the human-labeled training data that is crucial for developing technology, including the sophisticated AI models that power Gemini, its ChatGPT competitor, one of the sources said. The search giant already held conversations with several of Scale AI's rivals this week as it seeks to shift away much of that workload, sources added. Scale's loss of significant business comes as Meta takes a big stake in the company, valuing it at $29 billion. Scale was worth $14 billion before the deal. Scale AI intends to keep its business running while its CEO, Alexandr Wang, along with a few employees, move over to Meta. Since its core business is concentrated around a few customers, it could suffer greatly if it loses key customers like Google. In a statement, a Scale AI spokesperson said its business, which spans work with major companies and governments, remains strong, as it is committed to protecting customer data. The company declined to comment on specifics with Google. Scale AI raked in $870 million in revenue in 2024, and Google spent some $150 million on Scale AI's services last year, sources said. Other major tech companies that are customers of Scale's, including Microsoft, are backing away as well. Elon Musk's xAI is also looking to exit, one of the sources said. OpenAI decided to pull back from Scale several months ago, according to sources familiar with the matter, though it spends far less money than Google. OpenAI's CFO said on Friday that the company will continue to work with Scale AI, as one of its many data vendors. Companies that compete with Meta in developing cutting-edge AI models are concerned that doing business with Scale could expose their research priorities and road map to a rival, five sources said. By contracting with Scale AI, customers often share proprietary data as well as prototype products for which Scale's workers are providing data-labeling services. With Meta now taking a 49% stake, AI companies are concerned that one of their chief rivals could gain knowledge about their business strategy and technical blueprints. Google, Microsoft and OpenAI declined to comment. xAI did not respond to a request for comment. The bulk of Scale AI's revenue comes from charging generative AI model makers for providing access to a network of human trainers with specialized knowledge — from historians to scientists, some with doctorate degrees. The humans annotate complex datasets that are used to "post-train" AI models, and as AI models have become smarter, the demand for the sophisticated human-provided examples has surged, and one annotation could cost as much as $100. Scale also does data-labeling for enterprises like self-driving car companies and the U.S. government, which are likely to stay, according to the sources. But its biggest money-maker is in partnering with generative AI model makers, the sources said. Google had already sought to diversify its data service providers for more than a year, three of the sources said. But Meta's moves this week have led Google to seek to move off Scale AI on all its key contracts, the sources added. Because of the way data-labeling contracts are structured, that process could happen quickly, two sources said. This will provide an opening for Scale AI's rivals to jump in. "The Meta-Scale deal marks a turning point," said Jonathan Siddharth, CEO of Turing, a Scale AI competitor. "Leading AI labs are realizing neutrality is no longer optional, it's essential." Labelbox, another competitor, will "probably generate hundreds of millions of new revenue" by the end of the year from customers fleeing Scale, its CEO, Manu Sharma, told Reuters. Handshake, a competitor focusing on building a network of PhDs and experts, saw a surge of workload from top AI labs that compete with Meta. "Our demand has tripled overnight after the news," said Garrett Lord, CEO at Handshake. Many AI labs now want to hire in-house data-labelers, which allows their data to remain secure, said Brendan Foody, CEO of Mercor, a startup that in addition to competing directly with Scale AI also builds technology around being able to recruit and vet candidates in an automated way, enabling AI labs to scale up their data labeling operations quickly. Founded in 2016, Scale AI provides vast amounts of labeled data or curated training data, which is crucial for developing sophisticated tools such as OpenAI's ChatGPT. The Meta deal will be a boon for Scale AI's investors including Accel and Index Ventures, as well as its current and former employees. As part of the deal, Scale AI's CEO, Wang, will take a top position leading Meta's AI efforts. Meta is fighting the perception that it may have fallen behind in the AI race after its initial set of Llama 4 large language models released in April fell short of performance expectations.
Associated Press
16 hours ago
- Business
- Associated Press
Meta invests $14.3B in AI firm Scale and recruits its CEO for ‘superintelligence' team
Meta is making a $14.3 billion investment in artificial intelligence company Scale and recruiting its CEO Alexandr Wang to join a team developing 'superintelligence' at the tech giant. The deal announced Thursday reflects a push by Meta CEO Mark Zuckerberg to revive AI efforts at the parent company of Facebook and Instagram as it faces tough competition from rivals such as Google and OpenAI. Meta announced what it called a 'strategic partnership and investment' with Scale late Thursday. Scale said the $14.3 billion investment puts its market value at over $29 billion. Scale said it will remain an independent company but the agreement will 'substantially expand Scale and Meta's commercial relationship.' Meta will hold a 49% stake in the startup. Wang, though leaving for Meta with a small group of other Scale employees, will remain on Scale's board of directors. Replacing him is a new interim Scale CEO Jason Droege, who was previously the company's chief strategy officer and had past executive roles at Uber Eats and Axon. Zuckerberg's increasing focus on the abstract idea of 'superintelligence' — which rival companies call artificial general intelligence, or AGI — is the latest pivot for a tech leader who in 2021 went all-in on the idea of the metaverse, changing the company's name and investing billions into advancing virtual reality and related technology. It won't be the first time since ChatGPT's 2022 debut sparked an AI arms race that a big tech company has gobbled up talent and products at innovative AI startups without formally acquiring them. Microsoft hired key staff from startup Inflection AI, including co-founder and CEO Mustafa Suleyman, who now runs Microsoft's AI division. Google pulled in the leaders of AI chatbot company while Amazon made a deal with San Francisco-based Adept that sent its CEO and key employees to the e-commerce giant. Amazon also got a license to Adept's AI systems and datasets. Wang was a 19-year-old student at the Massachusetts Institute of Technology when he and co-founder Lucy Guo started Scale in 2016. They won influential backing that summer from the startup incubator Y Combinator, which was led at the time by Sam Altman, now the CEO of OpenAI. Wang dropped out of MIT, following a trajectory similar to that of Zuckerberg, who quit Harvard University to start Facebook more than a decade earlier. Scale's pitch was to supply the human labor needed to improve AI systems, hiring workers to draw boxes around a pedestrian or a dog in a street photo so that self-driving cars could better predict what's in front of them. General Motors and Toyota have been among Scale's customers. What Scale offered to AI developers was a more tailored version of Amazon's Mechanical Turk, which had long been a go-to service for matching freelance workers with temporary online jobs. More recently, the growing commercialization of AI large language models — the technology behind OpenAI's ChatGPT, Google's Gemini and Meta's Llama — brought a new market for Scale's annotation teams. The company claims to service 'every leading large language model,' including from Anthropic, OpenAI, Meta and Microsoft, by helping to fine tune their training data and test their performance. It's not clear what the Meta deal will mean for Scale's other customers. Wang has also sought to build close relationships with the U.S. government, winning military contracts to supply AI tools to the Pentagon and attending President Donald Trump's inauguration. The head of Trump's science and technology office, Michael Kratsios, was an executive at Scale for the four years between Trump's first and second terms. Meta has also begun providing AI services to the federal government. Meta has taken a different approach to AI than many of its rivals, releasing its flagship Llama system for free as an open-source product that enables people to use and modify some of its key components. Meta says more than a billion people use its AI products each month, but it's also widely seen as lagging behind competitors such as OpenAI and Google in encouraging consumer use of large language models, also known as LLMs. It hasn't yet released its purportedly most advanced model, Llama 4 Behemoth, despite previewing it in April as 'one of the smartest LLMs in the world and our most powerful yet.' Meta's chief AI scientist Yann LeCun, who in 2019 was a winner of computer science's top prize for his pioneering AI work, has expressed skepticism about the tech industry's current focus on large language models. 'How do we build AI systems that understand the physical world, that have persistent memory, that can reason and can plan?' LeCun asked at a French tech conference last year. These are all characteristics of intelligent behavior that large language models 'basically cannot do, or they can only do them in a very superficial, approximate way,' LeCun said. Instead, he emphasized Meta's interest in 'tracing a path towards human-level AI systems, or perhaps even superhuman.' When he returned to France's annual VivaTech conference again on Wednesday, LeCun dodged a question about the pending Scale deal but said his AI research team's plan has 'always been to reach human intelligence and go beyond it.' 'It's just that now we have a clearer vision for how to accomplish this,' he said. LeCun co-founded Meta's AI research division more than a decade ago with Rob Fergus, a fellow professor at New York University. Fergus later left for Google but returned to Meta last month after a 5-year absence to run the research lab, replacing longtime director Joelle Pineau.
Time of India
a day ago
- Business
- Time of India
Google, Scale AI's largest customer, plans split after Meta deal
HighlightsAlphabet's Google plans to sever ties with Scale AI after rival Meta Platforms Inc. acquires a 49% stake in the AI data-labeling startup, potentially impacting Scale's revenue significantly. The acquisition of Scale AI by Meta Platforms Inc. raises concerns among competing AI companies, as they fear that sharing proprietary data with Scale could expose their research strategies and technical blueprints. Following the news of Meta's investment, competitors of Scale AI, such as Turing and Labelbox, anticipate a surge in business as companies seek alternative data-labeling services. Alphabet's Google , the largest customer of Scale AI , plans to cut ties with Scale after news broke that rival Meta is taking a 49% stake in the AI data-labeling startup, five sources familiar with the matter told Reuters. Google had planned to pay Scale AI about $200 million this year for the human-labeled training data that is crucial for developing technology, including the sophisticated AI models that power Gemini, its ChatGPT competitor, one of the sources said. The search giant already held conversations with several of Scale AI's rivals this week as it seeks to shift away much of that workload, sources added. Scale's loss of significant business comes as Meta takes a big stake in the company, valuing it at $29 billion. Scale was worth $14 billion before the deal. Scale AI intends to keep its business running while its CEO, Alexandr Wang, along with a few employees, move over to Meta. Since its core business is concentrated around a few customers, it could suffer greatly if it loses key customers like Google. In a statement, a Scale AI spokesperson said its business, which spans work with major companies and governments, remains strong, as it is committed to protecting customer data. The company declined to comment on specifics with Google. Scale AI raked in $870 million in revenue in 2024, and Google spent some $150 million on Scale AI's services last year, sources said. Other major tech companies that are customers of Scale's, including Microsoft, are also backing away. Elon Musk's xAI is also looking to exit, one of the sources said. OpenAI decided to pull back from Scale several months ago, according to sources familiar with the matter, though it spends far less money than Google. OpenAI's CFO that the company will continue to work with Scale AI, as one of its many data vendors. Companies that compete with Meta in developing cutting-edge AI models are concerned that doing business with Scale could expose their research priorities and road map to a rival, five sources said. By contracting with Scale AI, customers often share proprietary data as well as prototype products for which Scale's workers are providing data-labeling services. With Meta now taking a 49% stake, AI companies are concerned that one of their chief rivals could gain knowledge about their business strategy and technical blueprints. Google, Microsoft and OpenAI declined to comment. xAI did not respond to a request for comment. RIVALS SEE OPENINGS The bulk of Scale AI's revenue comes from charging generative AI model makers for providing access to a network of human trainers with specialized knowledge - from historians to scientists, some with doctorate degrees. The humans annotate complex datasets that are used to "post-train" AI models, and as AI models have become smarter, the demand for the sophisticated human-provided examples has surged, and one annotation could cost as much as $100. Scale also does data-labeling for enterprises like self-driving car companies and the U.S. government, which are likely to stay, according to the sources. But its biggest money-maker is in partnering with generative AI model makers, the sources said. Google had already sought to diversify its data service providers for more than a year, three of the sources said. But Meta's moves this week have led Google to seek to move off Scale AI on all its key contracts, the sources added. Because of the way data-labeling contracts are structured, that process could happen quickly, two sources said. This will provide an opening for Scale AI's rivals to jump in. "The Meta-Scale deal marks a turning point," said Jonathan Siddharth, CEO of Turing, a Scale AI competitor. "Leading AI labs are realizing neutrality is no longer optional, it's essential." Labelbox, another competitor, will "probably generate hundreds of millions of new revenue" by the end of the year from customers fleeing Scale, its CEO, Manu Sharma, told Reuters. Handshake, a competitor focusing on building a network of PhDs and experts, saw a surge of workload from top AI labs that compete with Meta. "Our demand has tripled overnight after the news," said Garrett Lord, CEO at Handshake. Many AI labs now want to hire in-house data-labelers, which allows their data to remain secure, said Brendan Foody, CEO of Mercor, a startup that in addition to competing directly with Scale AI also builds technology around being able to recruit and vet candidates in an automated way, enabling AI labs to scale up their data labeling operations quickly. Founded in 2016, Scale AI provides vast amounts of labeled data or curated training data, which is crucial for developing sophisticated tools such as OpenAI's ChatGPT. The Meta deal will be a boon for Scale AI's investors including Accel and Index Ventures, as well as its current and former employees. As part of the deal, Scale AI's CEO, Wang, will take a top position leading Meta's AI efforts. Meta is fighting the perception that it may have fallen behind in the AI race after its initial set of Llama 4 large language models released in April fell short of performance expectations.
The Hindu
a day ago
- Business
- The Hindu
Google, Scale AI's largest customer, plans split after Meta deal
Alphabet's Google, the largest customer of Scale AI, plans to cut ties with Scale after news broke that rival Meta is taking a 49% stake in the AI data-labeling startup, five sources familiar with the matter told Reuters. Google had planned to pay Scale AI about $200 million this year for the human-labeled training data that is crucial for developing technology, including the sophisticated AI models that power Gemini, its ChatGPT competitor, one of the sources said. The search giant already held conversations with several of Scale AI's rivals this week as it seeks to shift away much of that workload, sources added. Scale's loss of significant business comes as Meta takes a big stake in the company, valuing it at $29 billion. Scale was worth $14 billion before the deal. Scale AI intends to keep its business running while its CEO, Alexandr Wang, along with a few employees, move over to Meta. Since its core business is concentrated around a few customers, it could suffer greatly if it loses key customers like Google. In a statement, a Scale AI spokesperson said its business, which spans work with major companies and governments, remains strong, as it is committed to protecting customer data. The company declined to comment on specifics with Google. Scale AI raked in $870 million in revenue in 2024, and Google spent some $150 million on Scale AI's services last year, sources said. Other major tech companies that are customers of Scale's, including Microsoft, are also backing away. Elon Musk's xAI is also looking to exit, one of the sources said. OpenAI decided to pull back from Scale several months ago, according to sources familiar with the matter, though it spends far less money than Google. OpenAI's CFO that the company will continue to work with Scale AI, as one of its many data vendors. Companies that compete with Meta in developing cutting-edge AI models are concerned that doing business with Scale could expose their research priorities and road map to a rival, five sources said. By contracting with Scale AI, customers often share proprietary data as well as prototype products for which Scale's workers are providing data-labeling services. With Meta now taking a 49% stake, AI companies are concerned that one of their chief rivals could gain knowledge about their business strategy and technical blueprints. Google, Microsoft and OpenAI declined to comment. xAI did not respond to a request for comment. RIVALS SEE OPENINGS The bulk of Scale AI's revenue comes from charging generative AI model makers for providing access to a network of human trainers with specialized knowledge - from historians to scientists, some with doctorate degrees. The humans annotate complex datasets that are used to "post-train" AI models, and as AI models have become smarter, the demand for the sophisticated human-provided examples has surged, and one annotation could cost as much as $100. Scale also does data-labeling for enterprises like self-driving car companies and the U.S. government, which are likely to stay, according to the sources. But its biggest money-maker is in partnering with generative AI model makers, the sources said. Google had already sought to diversify its data service providers for more than a year, three of the sources said. But Meta's moves this week have led Google to seek to move off Scale AI on all its key contracts, the sources added. Because of the way data-labeling contracts are structured, that process could happen quickly, two sources said. This will provide an opening for Scale AI's rivals to jump in. "The Meta-Scale deal marks a turning point," said Jonathan Siddharth, CEO of Turing, a Scale AI competitor. "Leading AI labs are realizing neutrality is no longer optional, it's essential." Labelbox, another competitor, will "probably generate hundreds of millions of new revenue" by the end of the year from customers fleeing Scale, its CEO, Manu Sharma, told Reuters. Handshake, a competitor focusing on building a network of PhDs and experts, saw a surge of workload from top AI labs that compete with Meta. "Our demand has tripled overnight after the news," said Garrett Lord, CEO at Handshake. Many AI labs now want to hire in-house data-labelers, which allows their data to remain secure, said Brendan Foody, CEO of Mercor, a startup that in addition to competing directly with Scale AI also builds technology around being able to recruit and vet candidates in an automated way, enabling AI labs to scale up their data labeling operations quickly. Founded in 2016, Scale AI provides vast amounts of labeled data or curated training data, which is crucial for developing sophisticated tools such as OpenAI's ChatGPT. The Meta deal will be a boon for Scale AI's investors including Accel and Index Ventures, as well as its current and former employees. As part of the deal, Scale AI's CEO, Wang, will take a top position leading Meta's AI efforts. Meta is fighting the perception that it may have fallen behind in the AI race after its initial set of Llama 4 large language models released in April fell short of performance expectations.
Indian Express
a day ago
- Business
- Indian Express
Meta poaches 28-year-old Scale AI CEO after taking multibillion dollar stake in startup
Facebook-owner Meta has invested in Scale AI in a deal that values the data-labeling startup at $29 billion and brings in its 28-year-old CEO, Alexandr Wang, to play a prominent role in the tech giant's artificial intelligence strategy. Meta will take a 49% stake for $14.3 billion, according to two sources familiar with the matter. 'We will deepen the work we do together producing data for AI models and Alexandr Wang will join Meta to work on our superintelligence efforts,' Meta said in a statement that did not disclose financial terms. The main driver for Meta's substantial investment in Scale was to secure Wang to lead its new superintelligence unit, according to a separate source briefed on the discussions. The sources were not authorised to speak to media and declined to be identified. Meta didn't immediately respond to a request for comment. Wang, who was born in Los Alamos, New Mexico, to Chinese immigrant physicists, dropped out of MIT to co-found Scale. He was quickly lauded as one of Silicon Valley's most promising entrepreneurs, raising funding from blue-chip venture capital firms and achieving billionaire status in his 20s. He has also cultivated relationships with top tech executives such as OpenAI CEO Sam Altman and has since leveraged his influence to build connections in Washington D.C., testifying in front of Congress and securing the federal government as a big client. Meta, once recognized as a leader in open-source AI models, has suffered from staff departures and has postponed the launches of new open-source AI models that could rival competitors like Google, OpenAI, and China's DeepSeek. By poaching Wang, who does not come from a research background but has built a major AI business, Meta CEO Mark Zuckerberg is betting that Meta's AI efforts can be turned around by an adept business leader more in the mold of Altman than the research scientists at the helm of most competing labs. Scale said the deal values it at $29 billion and that its chief strategy officer, Jason Droege, will serve as its interim CEO. The social media giant doesn't plan to take a board seat in Scale, one of the sources added. A few employees from Scale, a company with 1,500 people, will join Wang in moving to Meta, Wang said in a note to employees on Thursday. Wang will remain on Scale's board. The cash investment would rank as Meta's second-largest ever after its $19 billion buyout of WhatsApp. It's unclear if this deal will come under any regulatory scrutiny. Meta has been sued by the U.S. Federal Trade Commission, which alleges it illegally acquired Instagram and WhatsApp to stifle competition. Founded in 2016, Scale provides vast amounts of accurately labeled data, which is pivotal for training sophisticated tools like OpenAI's ChatGPT. To do so, Scale set up subsidiary platforms such as Remotasks and Outlier to recruit and manage gig workers who manually label the data. It was valued at nearly $14 billion in a May 2024 funding round that included Nvidia, Amazon and Meta among its backers. Despite the large investment sum, the deal might not be all good for Scale. Many AI labs that are clients of Scale could decide to discontinue using its services if they were to worry, that since Wang still sits on Scale's board, Meta might obtain an inside track into rivals' priorities around data. Still, the deal is a win for early venture capital investors in Scale, such as Accel and Index Ventures, who can cash out half of their stake in the startup.
