According to two sources familiar with the situation, Meta will acquire a 49% stake for $14.3 billion.
“We aim to expand our collaboration in producing data for AI models, and Alexandr Wang will join Meta to focus on our superintelligence initiatives,” Meta stated, though financial specifics were not disclosed.
The primary motivation behind Meta’s considerable investment in Scale was to bring Wang in to lead its new superintelligence division, as per another source familiar with the discussions.
The sources were not authorized to speak publicly and chose to remain anonymous. Meta has not responded promptly to requests for comment.
Wang, who hails from Los Alamos, New Mexico, where he was born to Chinese immigrant physicists, left MIT to co-found Scale. He quickly gained recognition as one of Silicon Valley’s most promising entrepreneurs, attracting investments from top-tier venture capital firms and achieving billionaire status in his 20s.
Additionally, he has built strong relationships with key tech figures like OpenAI CEO Sam Altman, leveraging his connections to forge ties in Washington D.C., including testifying before Congress and securing the federal government as a major client.
Having once been seen as a front-runner in open-source AI models, Meta now faces challenges such as staff turnover and delays in launching new open-source AI models that could compete with firms like Google, OpenAI, and China’s DeepSeek.
By recruiting Wang, who may not have a traditional research background but has established a significant AI business, Meta CEO Mark Zuckerberg is betting on a turnaround for Meta’s AI initiatives led by a savvy business leader, rather than the researchers typically found at competing labs.
Scale announced that the deal sets its valuation at $29 billion, with its chief strategy officer, Jason Droege, stepping in as interim CEO.
One source indicated that the social media giant does not intend to secure a board seat in Scale.
A number of Scale employees, part of the company’s 1,500-strong workforce, will transition to Meta alongside Wang, who will continue to serve on Scale’s board.
This cash investment ranks as Meta’s second-largest ever, following its $19 billion acquisition of WhatsApp.
It remains uncertain whether this deal will attract regulatory scrutiny, given Meta’s legal issues with the US Federal Trade Commission, which has accused the company of illegally acquiring Instagram and WhatsApp to limit competition.
Founded in 2016, Scale delivers vast quantities of accurately labeled data, essential for training advanced tools like OpenAI’s ChatGPT. To facilitate this, Scale operates subsidiary platforms such as Remotasks and Outlier, which recruit and manage gig workers for data labeling tasks.
Recently valued at nearly $14 billion during a May 2024 funding round, Scale counted Nvidia, Amazon, and Meta among its investors.
Despite the hefty investment, the deal may not entirely favor Scale.
Several AI labs that rely on Scale’s services may reconsider their partnerships out of concern that Wang’s board position could give Meta an advantage over competitors in terms of data access.
Nonetheless, this deal represents a notable success for Scale’s early venture capital backers, including Accel and Index Ventures, who will have an opportunity to liquidate half of their equity in the startup.
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