SAN FRANCISCO, June 16, 2025 — In a move that has sent ripples through the artificial intelligence industry, Meta’s $14.3 billion investment in Scale AI,  acquiring a 49% stake, has prompted a quiet but significant client exodus. Google, Scale’s largest customer, is reportedly severing ties, citing concerns over conflicts of interest, while other major players, including Microsoft, OpenAI, and xAI, are also reconsidering or reducing their engagements.

The strategic deal, which values Scale AI at $29 billion, also involves Scale’s CEO, Alexandr Wang, transitioning to a leadership role within Meta’s ambitious “superintelligence” initiative. While Scale AI has publicly stated it will continue to operate independently and uphold stringent data protection policies, many clients are unconvinced.

Google Leads Departure Amid Conflict Concerns

According to a Reuters report, Google had initially planned to spend $200 million with Scale AI in 2025 for human-labelled data to train its AI models, particularly those underpinning its Gemini product line. However, five sources indicate the company is now actively scouting alternative vendors. This decision is reportedly rooted in fears that proprietary information shared with Scale could be exposed to Meta, a key rival in the AI race.

Microsoft and OpenAI are said to be adopting a similar posture. OpenAI’s CFO confirmed a reduced engagement, although Scale remains among the company’s multiple data vendors. Elon Musk’s xAI is also seeking to exit its partnership with Scale, sources added.

AI Labs Seek Neutral Ground, In-House Solutions

The Meta-Scale alliance has heightened sensitivities around data confidentiality, especially as labelling companies often handle early-stage prototypes and confidential training datasets. The perception of neutrality, once taken for granted, has now become essential in the eyes of AI developers.

In response, many labs are pivoting towards in-house data labelling to maintain tighter control over sensitive workflows. Meanwhile, rival firms such as Labelbox, Handshake, and Mercor are seeing a surge in demand. Labelbox expects to gain hundreds of millions in new revenue from fleeing Scale clients, while Handshake reported a tripling of demand overnight.

Scale AI’s Future: Resilient but Uncertain

Despite the backlash, Scale AI maintains a strong foundation. The company earned $870 million in revenue in 2024 and continues to serve enterprise and government clients. However, given that a majority of its revenue stems from the generative AI segment, the loss of key partners like Google could significantly impact its financial trajectory.

Founded in 2016, Scale AI has played a vital role in advancing large AI models by providing access to specialised human annotators. While the Meta partnership enhances its financial backing and investor returns, it has also compromised its position as a trusted neutral service provider in a highly competitive and secretive industry. As the dust settles, the Meta-Scale deal may come to be viewed as a watershed moment, a realignment of trust, neutrality, and independence in the rapidly evolving AI ecosystem.

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