In an industry famed for moving fast and breaking things, it's odd to hear of anyone slowing down. But just a few weeks on from Meta investing $14.3 billion in data annotation firm, Scale AI, it's laying off over 200 staff and 500 of its global contractors, The Verge reports. Although this may amount to classic efficiency savings when two large firms merge their efforts, the CEO claims that it's because "we ramped up our GenAI capacity too quickly over the past year."
Meta announced its pivot towards developing "superintelligence" AI at the start of June, alongside talk of enormous signing bonuses to attract OpenAI employees, and news of a $14 billion investment in Scale AI. That gave Meta a 49% stake in the business, and the attention and time of its then CEO, Alexander Wang, who has since joined Meta. But even with all that investment, Scale AI is looking to cut back on a sizeable number of its employees.
As of the start of July, Scale AI, according to the company's own website, employed 900 people, so cutting 200 staff represents a major reduction in its workforce. This is coming as part of a major restructuring of its business, with Scale AI claiming that it will make new hires and investments with a focus on public sector and international public sector markets.
“The reasons for these changes are straightforward: we ramped up our GenAI capacity too quickly over the past year,” Droege said. “While that felt like the right decision at the time, it’s clear this approach created inefficiencies and redundancies. We created too many layers, excessive bureaucracy, and unhelpful confusion about the team’s mission. Shifts in market demand also required us to re-examine our plans and refine our approach.”
This comes at a time of increasing competition among the major tech firms as they jostle for the top AI talent. Meta has made a number of staffing acquisitions from other companies, and Google managed to swipe a deal with Windsurf right out from under OpenAI's nose, with the CEO now joining Google instead. Although being let go during a time of consolidation may not be the best thing to put on a CV, experienced AI workers are in serious demand, and the major tech firms are paying big money to secure the top talent, so there is hope for those let go.
It's also perhaps the first suggestion that even the AI industry isn't immune to layoffs. As many other major tech firms downsize because of claimed AI gains in efficiencies, Meta, Google, OpenAI, and others have been focusing mostly on hiring new talent. But perhaps old talent has as few guarantees as it does in less AI-centric businesses.
Arguably more intriguing from an AI-industry perspective is that Scale AI is severing ties with so many of its international contractors. Scale AI's business is built around having thousands of workers hand-label AI data to improve responses and image recognition. As Time reports, scaling back these efforts could be part of reducing Scale AI's involvement with rival AI firms, like OpenAI, to which the firm currently supplies data.
Regardless, this is the future of Scale, with Meta's thumb firmly on them.
“We‘re streamlining our data business to help us move faster and deliver even better data solutions to our GenAI customers,” Droege said.
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