Alphabet's Google (GOOGL, Financial) plans to terminate its partnership with AI data labeling startup Scale AI due to concerns that competitor Meta's 49% stake in Scale AI could lead to proprietary AI development data leaks. The collaboration required substantial data sharing, prompting worries among AI companies about potential exposure of strategic plans to Meta.
Initially, Google intended to pay Scale AI around $200 million for manually labeled training data critical for developing its AI models, including the Gemini model competing with ChatGPT. To mitigate risks, Google has approached other Scale AI competitors, considering diversifying data handling tasks to reduce dependency on Scale AI.
Meanwhile, Meta's continued acquisition of Scale AI shares has increased Scale AI's valuation from $14 billion to $29 billion. However, Scale AI heavily relies on a few major clients, and losing Google could significantly impact its operations. Despite concerns, Scale AI claims to maintain partnerships with many large corporations and government agencies, guaranteeing client data protection.
Scale AI's CEO Alexandr Wang and some employees have moved to Meta, raising data breach concerns. In 2024, Scale AI's revenue is projected at $870 million, with Google contributing approximately $150 million, highlighting potential revenue impacts from Google's withdrawal.
