July 16 (UPI) — Scale AI, a private U.S. technology company that helps develop artificial intelligence applications, on Wednesday laid off 14% of its staff after tech giant Meta took a $14.3 billion 49% stake and hired its CEO last month.
Jason Droege, who became interim CEO after the departure of founder Alexandr Wang, told employees in an email that “we ramped up our GenAI capacity too quickly over the past year. While that felt like the right decision at the time, it’s clear this approach created inefficiencies and redundancies.”
He added: “We created too many layers, excessive bureaucracy, and unhelpful confusion about the team’s missions. Shift in market demand also required us to re-examine our plans and refine our approach.”.
The changes will result in the loss of 200 employees, who received severances, at the San Francisco-based company. Also, 500 contractors out of several thousands worldwide won’t be used, spokesperson Joe Osborne told CNBC.
The company relies on humans, often from outside the United States, to annotate data used by companies that include Google, OpenAI and Anthropic to train AI models, The Verge reported.
“We remain a well-resourced, well-funded company,” Droege wrote.
Despite the layoffs, the company plans to hire new workers in areas that include enterprise, public sector and international public sector in the second half of this year.
“We’re streamlining our data business to help us move faster and deliver even better data solutions to our GenAI customers,” Droege wrote.
ScaleAI was founded in 2016.
Nine years later, the AI sector is rapidly changing.
OpenAI has been winding down work with Scale AI, and Google will be cutting ties with the company after the deal with Meta.
Google plans to make its Gemini Code Assist more useful for software developers. On Friday, the company paid $2.4 billion for licensing rights and top talent from AI software coding startup Windsurf.
Meta, in an effort to better compete with OpenAI, announced on June 13 that it took a near majority stake in the company without voting rights. Wang will serve as the company’s chief AI officer in overseeing the public company’s new organization, Meta Superintelligence Labs, formed last month. Several other ScaleAI employees are joining Meta.
Wang remains as director of Scale AI’s board of directors.
In March, the U.S. Department of Defense awarded the company a multi-million-dollar contract for one of its flagship military programs.
On Monday, CEO Mark Zuckerberg said his company will invest in “hundreds of billions of dollars” in AI with the world’s first supercluster online next year.
Meta owns Facebook, Instagram, WhatsApp and Threads.
In April, Meta raised its 2025 capital expenditures forecast to between $64 million and $72 billion.
Meta would be the first lab to bring online a supercluster of 1 gigawatt, or one billion watts, to train advanced AI models and handle the workloads, according to SemiAnalysis.
Also Monday, Amazon Web Services unveiled Kiro, a program that allows designers to write code with help from AI.
And on Monday, AI startup Cognition announced it is acquiring Windsurf’s intellectual property, produce, trademark, brand and talent for an undisclosed amount.
