Meta invests $14.8 bln in Scale AI, hires its 28-year-old CEO

Meta, the parent company of Facebook, has invested $14.8 billion in Scale AI, a data-labeling startup, in a deal that values the company at $29 billion. As part of the agreement, Scale AI's 28-year-old CEO, Alexandr Wang, will step down to join Meta's artificial intelligence (AI) initiatives. The deal gives Meta a 49% nonvoting stake in Scale AI but does not include a board seat or control over the startup, according to a report by Reuters.  

As per the report, Scale AI specialises in labelling data used to train AI models, working with major tech firms, including Microsoft and OpenAI. However, some competitors, such as Google, have reportedly begun cutting ties with Scale AI due to concerns about Meta's involvement. The deal with Meta is structured in a way that avoids immediate antitrust scrutiny, though regulators could still investigate if they believe it harms competition, states the report.  

Wang, a college dropout who co-founded Scale AI in 2016, quickly rose to prominence in Silicon Valley, turning the company into a key player in AI development. His move to Meta signals CEO Mark Zuckerberg's push to strengthen the company's AI capabilities after setbacks in open-source AI development. Meta has faced delays in launching new AI models and has lost key researchers to rivals like Google and OpenAI. By bringing in Wang—a business leader rather than a scientist—Zuckerberg appears to be betting on a new direction for Meta's AI efforts, suggests the Reuters report.

The deal is Meta's second-largest investment ever, behind its $19 billion acquisition of WhatsApp in 2014. While it provides a lucrative exit for early investors in Scale AI, questions remain about how other AI companies will react. Some may reduce their reliance on Scale AI's services due to concerns about Meta gaining indirect insights into their operations.  

Scale AI's interim CEO will be Jason Droege, the company's chief strategy officer, while Wang remains on its board. A small number of Scale AI employees are expected to follow Wang to Meta, adds the Reuters report. The deal highlights Meta's aggressive push into AI as it competes with tech giants like Google and OpenAI in the race to develop advanced artificial intelligence.