Scale AI lays off 14% of staff, largely in data-labeling business

Data-labeling startup Scale AI is laying off 200 employees, roughly 14% of its staff, and cutting ties with 500 of its global contractors, Bloomberg reported on Wednesday. The cuts come just a month after Meta hired Scale AI’s CEO in a $14.3 billion deal.

In a memo obtained by Bloomberg, interim CEO Jason Droege told staff that Scale AI had too quickly scaled its core data-labeling business — in which the startup supplied AI labs with labeled, structured data to train AI models. Droege said in the memo that Scale AI would staff up around its enterprise and government sales units.

Like other AI startups that have been reverse acqui-hired, such as Inflection, it seems that Scale AI now has to pivot from the business that put it on the map. In light of Meta’s investment, several of Scale AI’s largest data customers cut ties with the startup.