Catenaa, Friday, June 20, 2025- Google, Microsoft, and Elon Musk’s xAI are reportedly ending or scaling back their business relationships with AI data-labeling startup Scale AI following Meta Platforms’ acquisition of a 49% stake in the company.
The deal, which values Scale AI at $29 billion, has triggered concerns among major tech players about sharing proprietary research and data with a direct competitor.
Google, Scale AI’s largest client, had been expected to spend roughly $200 million this year for human-labeled training data critical to projects such as Google’s Gemini AI.
Sources tell Reuters Google has already begun discussions with alternative data-labeling firms, signaling a shift in workload away from Scale AI.
Microsoft and Elon Musk’s xAI are also reported to be distancing themselves from the startup.
Scale AI CEO Alexandr Wang is slated to join Meta along with several employees, while the company plans to maintain operations.
The startup reported revenues of $870 million in 2024 but faces a potential hit from losing key clients.
The Meta investment was one of the largest private funding rounds in tech history and was seen as a strategic push to accelerate AI development. However, it has also raised alarm among rival firms about possible exposure of their AI research priorities to Meta through the shared data-labeling service.
None of the companies involved has issues statements in this regard todate.
