Meta Befriends Scale AI: Meta invests $14.3 billion in Scale AI, hires CEO Alexandr Wang

Meta hired the leadership of ScaleAI and put billions into the data-labeling startup to accelerate its AI efforts.

What’s new: Meta recruited Scale AI founder and CEO Alexandr Wang along with members of his team and pumped $14.3 billion into the startup in a new deal. The agreement, which was inked as the United States Federal Trade Commission investigates Meta over its acquisitions of Instagram and WhatsApp, could avoid the government scrutiny that acquiring Scale AI outright would have invited.

How it works: The agreement between Meta and Scale AI gives Meta an infusion of high-profile talent and priority access to Scale AI’s large-scale data operations. It doubles the valuation of Scale AI, which was valued at $13.8 billion last year, and provides funding to fuel growth and reward shareholders. The terms echo similar deals last year between Microsoft and Inflection AI, Amazon and Adept AI, and Google and Character.AI.

• Wang will oversee a Meta research lab focused on developing superintelligence, a term that refers loosely to artificial intelligence that exceeds human intelligence, The New York Times reported. The 28-year-old executive has expertise in model training and evaluation.
• Meta’s investment in Scale AI bought 49 percent of the startup in non-voting shares.
• Scale AI will use the investment to “accelerate innovation and strengthen strategic partnerships,” the company said. It plans to distribute some of the funds to shareholders and vested equity holders.
• Scale AI Chief Strategy Officer Jason Droege will take over as Scale AI’s interim CEO.
• Since Meta’s investment became publicly known, some of Scale AI’s major customers including Google and OpenAI announced they would seek new providers of data labeling services.

Behind the news: Wang and his team could help fulfill Meta’s need for top AI talent.

• Wang founded Scale AI in 2016, when he was a teenager. As the company’s business grew, he found himself, at the age of 24, the world’s youngest self-made billionaire. 
• Meta’s AI efforts have lost traction since its Llama 4 large language model met with a cool reception. In April, unnamed Meta employees told Fortune Meta’s AI lab was “dying a slow death.” The same month, AI research chief Joelle Pineau stepped down after 8 years in the position.
• Since then, Meta has been on a mission to add firepower to its AI divisions. CEO Mark Zuckerberg discussed acquiring, among others, Safe Superintelligence, founded by former OpenAI chief scientist Ilya Sutskever and former head of Apple AI Daniel Gross, and Perplexity AI.

Why it matters: Meta is racing with other Silicon Valley giants to establish and maintain a decisive lead in AI, and that requires making big bets. In this deal, it gains a star AI entrepreneur as well as closer access to Scale AI’s pipeline of high-quality training data. For Scale AI, Meta’s enormous resources and know-how could come in handy as it contends with competitors and extends its business into new areas. For the AI community, Meta’s willingness to spend such an immense sum for top talent could boost engineers’ salaries and block less-moneyed competitors.

We’re thinking: Meta has made valuable contributions to open-weights models, including Llama 4, and it has played an important role in making open models competitive with their closed counterparts. We look forward to seeing what the new team will accomplish!