Scale AI lays off 200 staff, cuts 500 contractors after $14.3B Meta deal and CEO departure

Just one month after Meta invested $14.3 billion in the startup and hired away its founder and CEO, Alexandr Wang, Scale AI is laying off a significant chunk of its workforce and cutting ties with hundreds of contractors.

The San Francisco-based data-labeling company has let go of 200 full-time employees—roughly 14% of its global staff, according to a report from Bloomberg, citing a statement by Scale spokesperson Joe Osborne. On top of that, the company will no longer work with 500 of its global contractors.

“The company cut 200 full-time employees, about 14% of its global workforce, and will provide severance,” Bloomberg reported.

In a memo to employees obtained by Bloomberg, interim CEO Jason Droege acknowledged that Scale had grown its core data-labeling business too quickly. That business—once the heart of Scale AI’s rise—provided structured data to train AI models, a critical piece of the machine learning pipeline. But with the shift in leadership and a massive investment from Meta, Scale is now trying to recalibrate.

Droege told employees the company will focus on building out its enterprise and government sales divisions going forward.

The shakeup comes at a time when several of Scale AI’s largest customers have reportedly walked away following Meta’s involvement. The move mirrors what happened with Inflection, another AI startup that had to pivot after being reverse-acqui-hired by Microsoft. In Scale’s case, Meta didn’t acquire the company outright, but its $14.3 billion investment and poaching of CEO Alexandr Wang have clearly triggered a reset.

For a startup once seen as an indispensable part of the AI infrastructure stack, the layoffs signal a sharp turn away from the business that put it on the map.

Scale AI was founded in 2016 by CEO Alexandr Wang and Lucy Guo. The startup has established its reputation as a pivotal player in the AI landscape, with a focus on the critical aspect of providing training data for AI applications. Wang’s entrepreneurial journey, which began at the age of 19 while he was a student at MIT, has propelled him to the ranks of the youngest self-made billionaires globally.

Wang, who dropped out of MIT to launch Scale AI in 2016, has built one of the most influential startups in the AI space. Scale works with tech giants like OpenAI, Google, and Microsoft to prep the massive datasets used to train modern AI models. Meta is already one of its biggest customers. Now, with Wang stepping in to lead a new AI lab at Meta, the relationship is getting a lot deeper.