Scale AI, the San Francisco–based data labeling specialist for AI model training, has laid off around 14% of its workforce—roughly 200 full-time employees—and ended contracts with about 500 global contractors. The move follows a recent $14.3 billion investment from Meta, which took a 49% stake and brought in Scale’s founder Alexandr Wang to lead Meta’s new Superintelligence initiative.
Why the Layoffs Happened
Interim CEO Jason Droege explained that Scale’s generative AI (GenAI) division expanded too quickly over the past year, causing inefficiencies, excessive bureaucracy, and mission confusion across 16 internal pods. To correct course, GenAI will be restructured into just five strategic units: code, languages, experts, experimental, and audio. The goal is to focus on high-growth, profitable opportunities and eliminate low-revenue projects.
Fallout from Meta Partnership
Major clients, including Google and OpenAI, scaled back or halted their relationships with Scale following Meta’s investment and organizational shake-up. Scale has acknowledged being unprofitable in its GenAI business, though a spokesperson later disputed that claim.
Future Strategy & Hiring Plans
Despite the cuts, Scale insists it remains well-funded and financially strong. It plans to invest heavily and hire hundreds of employees in the latter half of 2025, focusing on the enterprise, public sector, and international markets.
Broader Implications for AI and Tech Industry
- Realignment Toward Profitability: Scale joins other tech firms in cutting costs and re-focusing strategy.
- Client Sensitivities: Concerns grew around data security post-Meta alliance.
- AI Workforce Trends: Part of 2025’s larger tech layoff wave triggered by overhiring and economic shifts.
Recommendations for AI Stakeholders
- Diversify data vendor relationships.
- Monitor contractor labor rights and classification.
- Re-evaluate investment risk amid strategic shifts.
✅ Conclusion
Scale AI’s 14% workforce reduction—200 full-timers and 500 contractors—marks a pivotal shift toward sustainable GenAI operations. Sparked by Meta’s deep involvement and the need to reorient around profit, the company aims to emerge leaner and more focused, with plans to grow again in H2 2025.
