Restructuring Follows Rapid Expansion and Leadership Change
Just weeks after Meta poured $14.3 billion into Scale AI and hired its founder Alexandr Wang, the artificial intelligence startup is laying off 200 full-time employees, or roughly 14% of its workforce. The announcement was made by interim CEO Jason Droege, who took over leadership following Wang’s departure to lead Meta’s AI division. In a company-wide memo, Droege admitted the firm had expanded its generative AI operations too quickly and accumulated unnecessary bureaucracy.
The cuts come as Scale AI attempts to streamline its data labeling business and reorient its focus on application-specific AI services. Despite the layoffs, Droege emphasized that the company remains well-funded and plans to increase hiring in the second half of the year across enterprise, public sector, and international divisions.
Strategic Shift to Regain Momentum and Clients
Founded in 2016, Scale AI has been instrumental in helping major tech players such as OpenAI, Google, and Microsoft prepare data used to train their AI models. However, relationships with some of these clients have recently cooled. OpenAI has reportedly scaled back its use of Scale AI’s services over the past year, and Google is said to be ending its partnership following the firm’s high-profile deal with Meta.
In total, the company had 1,400 employees globally before the layoffs. In addition to the job cuts, Scale AI will also terminate contracts with 500 external contractors. Company spokesperson Joe Osborne stated that affected employees would receive severance, and that the restructuring would allow the firm to deliver faster, higher-quality data services for its generative AI clients.
Meta’s AI Bet and Wang’s New Role
Meta’s recent investment in Scale AI and hiring of Wang reflect the tech giant’s aggressive push to dominate the artificial intelligence race. Wang is now serving as Meta’s chief AI officer, leading the newly formed Meta Superintelligence Labs. A small number of Scale AI employees have reportedly joined Meta alongside him.
With Meta competing fiercely against companies like OpenAI and Google, its strategy includes investing in foundational AI tools and top talent. Wang’s appointment signals Meta’s ambition to build industry-defining AI systems under a centralized leadership model.
What’s Next for Scale AI?
Scale AI’s new leadership is focused on adapting to evolving customer needs and market dynamics. The company plans to reinvest in growing business units that serve enterprises and government agencies. This shift is aimed at reducing reliance on large tech clients and repositioning Scale AI as a more agile, application-driven AI provider.
In the memo, Droege expressed gratitude to the outgoing employees and reaffirmed the company’s long-term vision. While the layoffs mark a significant internal shift, Scale AI appears poised to evolve its business model amid the increasingly competitive and high-stakes AI landscape.