After Zuckerberg heavily invested and poached high-paying executives, the leader in AI data labeling, Scale AI, laid off 14% of its staff.

Meta (META.US), the parent company of Facebook and Instagram, has recently made a massive investment of nearly $15 billion in the AI startup company Scale AI, which leads the field of AI data annotation. They have also hired the founder and CEO of Scale AI, Alexandr Wang. However, just a few weeks later, Scale AI announced the layoff of 200 full-time employees, accounting for as much as 14% of its total workforce. Since the beginning of this year, Meta has been aggressively investing in AI and actively engaging in major acquisitions related to AI. They have been recruiting top talent in the AI field from competitors such as Alphabet Inc. Class C (Alphabet) and OpenAI to build a "superintelligence team." This unprecedented AI acquisition spree led by Meta has drawn comparisons to their early aggressive acquisitions of Instagram and WhatsApp in the global social media wave, when the company was still known as Facebook. The success of these acquisitions more than a decade ago has proven Meta's keen investment vision. According to a memo sent to employees by interim CEO Jason Droege, Scale AI has been expanding too rapidly in its generative AI business and has developed an overly bureaucratic hierarchy. He mentioned that Scale AI still has ample funding and talented resources, and these adjustments will make the company more flexible and better able to respond to market and customer demands. Droege emphasized that Scale AI will significantly increase its workforce in its AI application business units in the second half of this year, covering sectors such as enterprise, government, and international public sectors. After the media reported on the scale of layoffs, a Scale AI spokesperson confirmed the information to the media. Scale AI was founded in 2016 and is globally known for its data annotation services tailored for training cutting-edge AI models for large tech companies like OpenAI, Alphabet, and Microsoft. Following the significant investment agreement with Meta, Meta's main competitors have significantly reduced their cooperation with Scale AI. As the global demand for other AI data annotation service providers has surged following Meta's massive investment, companies like Labelbox and Turing are seeing increased demand for their data labeling services. Some companies, including those listed as superstars on Scale AI's website, are reevaluating their reliance on Scale AI's data annotation services after Meta's substantial investment. Prior to the layoffs, Scale AI had around 1,400 employees globally. Joe Osborne, a spokesperson for Scale AI, stated that laid-off employees will receive severance pay. Additionally, the company will terminate contracts with 500 of its thousands of contract workers worldwide. Osborne explained in a statement, "We are streamlining our data business to act more quickly and provide higher-quality data annotation solutions for our generative AI customers. We also plan significant investments in enterprise and government AI businesses and significant hiring." Meta is currently in the midst of a multi-billion dollar AI recruitment frenzy to better compete with rivals like OpenAI. Shortly after acquiring a 49% stake in Scale AI for nearly $15 billion, Meta CEO Mark Zuckerberg personally hired Scale AI's CEO Alexandr Wang to serve as the company's Chief AI Officer and lead the newly established Meta Superintelligence Labs. A small fraction of Scale AI employees have also joined Meta. Last week, under Zuckerberg's leadership, Meta completed the acquisition process of PlayAI, a small AI startup focused on AI voice technology. The entire PlayAI team will join Meta next week, adding to Zuckerberg's AI ambitions. Zuckerberg has made advancing AI technology and integrating AI into Meta's software ecosystem a top priority for this year. He is investing heavily, approximately $65 billion, in AI server clusters, high-performance Ethernet switch systems, and actively recruiting top talent globally to build the strongest AI models and develop a powerful AI application software ecosystem based on the Meta system. Droege wrote in a memo on Wednesday, "For the employees who have been laid off, I want to express my deepest gratitude for their valuable contributions and dedication to this AI startup company."