Scale AI cuts 200 full-time staff weeks after Meta’s US$14.3B investment and founder Alexandr Wang’s exit

INTERNATIONAL: Just weeks after securing a US$14.3 billion (S$18.39 billion) investment from Meta and seeing its founder, Alexandr Wang, move over to the tech giant, artificial intelligence startup Scale AI has announced it is laying off 14% or 200 of its full-time employees, CNBC reported.

In an internal memo to staff on Wednesday, interim CEO Jason Droege said the company expanded its generative AI operations “too quickly,” which resulted in many layers of “excessive bureaucracy.”

In the memo viewed by CNBC, it said, “These changes will make us more nimble, enabling us to react more quickly to shifts in the market and customer needs. This structure will allow us to better serve the customers we have today and win back customers that have slowed down work with us.”

“I want to extend our deepest gratitude for their valuable contributions and dedication to our company,” it added.

Despite the job cuts, Mr Droege said Scale AI is still in a strong financial position and plans to hire more staff in the second half of the year across its application business units, including its enterprise and public sector as well as international public sector divisions.

The job cuts were first reported by Bloomberg.

Scale AI spokesperson Joe Osborne said the company will also be ending work with 500 contractors worldwide. Before the layoffs, the company had 1,400 employees worldwide. Mr Osborne said those laid off have been provided severance.

He said that the company has been streamlining the business to move faster and deliver even better data solutions to GenAI customers. “We also plan to make significant investments and hiring across our enterprise and government AI businesses,” he added.

Scale AI was founded in 2016 and helps tech companies prepare data to train artificial intelligence models. It has worked with major firms like OpenAI, Microsoft and Google. However, Reuters reported that OpenAI has been cutting back its use of Scale AI’s services over the past year, while Google is reportedly cutting ties with the company following its deal with Meta.

Earlier this month, Bloomberg also reported that Apple’s top executive, Ruoming Pang, was leaving the company to join Meta’s new superintelligence team. /TISG

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