Scale AI Layoffs 200 Employees a Month After Meta Acquisition

Scale AI is reducing its workforce by hundreds in its data-labelling division, just a month after Meta invested $14.3 billion in the company and hired its CEO.

According to Bloomberg, the firm has laid off 200 full-time employees, representing approximately 14% of its total global staff. It plans to discontinue work with 500 of its numerous global contractors, as stated by Scale spokesperson Joe Osborne on Wednesday. 

This initiative aims to "streamline our data business to help us move faster," Osborne explained, noting that Scale intends to bolster teams in other areas, such as enterprise and government sales. 

In a memo sent to employees on Wednesday, interim CEO Jason Droege indicated that the layoffs stemmed from an overexpansion of the data labelling division throughout the past year, resulting in “too many layers, excessive bureaucracy, and unhelpful confusion about the team’s mission.”

Droege also stated that “shifts in market demand” played a role in the decision to restructure. Following the partnership with Meta, several of Scale’s key clients, including OpenAI and Alphabet’s Google, have reduced their engagement with the startup, according to various reports.

“We’re streamlining our data business to help us move faster and deliver even better data solutions to our GenAI customers,” Osborne told CNBC in a statement. “We also plan to make significant investments and hire across our enterprise and government AI businesses.”

Scale AI generated approximately $870 million in revenue in 2024 and is projected to reach $2 billion in revenue for this year, as reported by Bloomberg News in April. In June, Meta completed its multibillion-dollar investment in Scale AI, acquiring a 49% ownership stake in the company. 

As a result of this agreement, co-founder Alexandr Wang departed from the startup to head a new superintelligence division at Meta, which is part of the parent company's significant investment aimed at advancing its AI development.