Meta to invest $14 billion in Scale AI after lackluster reception to Llama
Meta is making its largest bet yet on artificial intelligence, finalising a $14 billion deal to invest in Scale AI, a prominent startup in data labelling and AI model training.
The move comes as Meta's CEO Mark Zuckerberg grows increasingly frustrated with the company's standing in the fast-evolving AI race, with rivals like OpenAI seemingly ahead in both AI models and consumer applications.
Meta will take a 49% stake in Scale AI, according to CNBC.
In addition to the investment, Zuckerberg is hiring Scale AI’s co-founder, Alexandr Wang, to lead a new AI research lab within Meta.
Wang, known for his technical expertise and business acumen, will join Meta with a team of his colleagues to strengthen the company’s AI capabilities, particularly following the lacklustre reception of Meta’s recent Llama AI models.
Meta taking a 49% stake in Scale AI for $14.8B, investors and employees get paid.
Meta prob wanted to acquire them but didn’t want to go through regulatory approval so found this roundabout scheme.
Alexandr will run Meta’s superintelligence lab, and Scale will find a new ceo pic.twitter.com/I2nuBgIA6TThis strategic partnership follows a broader trend in the tech industry, where companies like Google and Microsoft have taken large stakes in AI startups such as Character.AI and Inflection AI, rather than acquiring them outright.
There is speculation that Meta, currently in a high-profile antitrust trial with the Federal Trade Commission, is reportedly keen to avoid further scrutiny from regulators, hence the decision to invest rather than acquire.
Founded in 2016, Scale AI has established itself as a key player in the AI space, providing data labelling services to major tech companies, including Meta’s competitors, OpenAI, Google, and Microsoft.
The company’s valuation reached $14 billion in its most recent funding round.
Scale AI has expanded its presence beyond tech into the defence sector, securing a multimillion-dollar deal with the US Department of Defense in March.
Wang’s reputation as a “wartime CEO” who understands the complexities of AI and the global competition, particularly with China, has made him an appealing figure for Zuckerberg.
It's a very interesting deal structure where Meta effectively controls Scale AI, doesn't have to go through antitrust review and acquires top talents including Alexander Wang while paying half of the cash it needs to buy up the whole company.
On another note, this may be a… pic.twitter.com/nFJFPlwQreWang has publicly spoken about the need for the US to increase its computational capacity to remain competitive in AI, calling it an “AI war” between the US and China.
This shift in Meta’s approach highlights Zuckerberg’s recognition that external talent may be needed to accelerate its AI ambitions.
With Wang’s experience and Scale AI’s advanced capabilities, Meta is positioning itself to improve its AI models and enhance its competitive edge in a rapidly evolving industry.