Meta Platforms is reportedly in advanced discussions to invest over $10 billion in AI startup Scale AI. This would mark Meta's largest external investment in the AI sector and one of the biggest private company funding deals in history. However, the terms are not yet finalized and may change.
Founded in 2016 by Alexandr Wang and Lucy Guo, Scale AI is based in San Francisco. The company specializes in data labeling, using numerous contractors to help tech giants like Microsoft, Meta, and OpenAI train AI models. Scale AI generated $870 million in revenue last year and is expected to double its revenue to $2 billion this year.
In May 2024, Scale AI raised $1 billion in its latest funding round, boosting its valuation to $14 billion, with investments from Meta, Microsoft, and Amazon. The company is reportedly seeking a private valuation of up to $25 billion. Recently, Scale AI developed a military-focused language model, Defense Llama, based on Meta's open-source Llama 3.
The U.S. Department of Labor had investigated Scale AI for potential Fair Labor Standards Act violations due to its reliance on contractors, but the investigation concluded in May.
Meta's investment signals a shift in its AI strategy, moving from internal R&D and open-source approaches to significant external investments, similar to Microsoft's $13 billion investment in OpenAI and Amazon's $8 billion in Anthropic.
