Silicon Valley’s AI alliances are fracturing — and the ripple effects are just beginning.
OpenAI is beginning to phase out it relationship with Scale AI, a once-critical data partner whose founder has just defected to rival Meta amid a $14.3 billion investment. While speculation swirls that Meta’s recent moves triggered the split, OpenAI insists that the decision was already in motion long before the tech giant intervened.
What is Scale AI?
Founded in 2016, Scale AI is a data annotation, preparation, and labeling company headquartered in San Francisco. Scale AI gained significant momentum shortly after its initial launch, quickly securing deals with OpenAI, Meta, Microsoft, Cisco, SAP, Time, Harvard Medical School, and many others.
The company specializes in customized AI solutions, most of which are based on the Scale GenAI Platform. As the name suggests, it leverages generative AI and agents that are designed to extract and analyze data, strengthen employee productivity, and enhance the overall customer experience.
Parting ways with Scale AI
According to a spokesperson with OpenAI as reported by Bloomberg, the company has been gradually phasing out its work with Scale AI over the past year, which implies that its decision to part ways was not influenced by Meta. However, OpenAI might not be the only company that is looking for greener pastures.
Brendan Foody, chief executive officer of Mercor and a competitor to Scale, recently said: “We’re already seeing a huge influx of demand from customers that are phasing out of Scale AI.”
Following Meta’s $14.3 billion investment in Scale AI, and with Scale’s founder and CEO, Alexandr Wang, leaving the company to work for Meta, some believe that more companies will likely follow OpenAI’s lead. Regardless of what happens, Wang will still play an active role with Scale AI.
In a recent X post, Wang said: “I will be leaving Scale to join Meta to work on Meta’s AI efforts, along with a few other Scaliens. While it is bittersweet to depart as CEO, I would never leave Scale behind. I’ll stay on as a director on the Board, continuing to support Scale’s mission and long-term vision.”
Jason Droege, Scale AI’s current chief strategy officer, will serve as Wang’s replacement for the position of CEO.
Continuing the search
For now, OpenAI continues to search for a replacement for Scale AI. We’ve already covered their ongoing negotiations with Microsoft, which see the tech giant vying for a larger share of OpenAI’s proposed for-profit business model; however, there are signs that these issues have been brewing over the past few months as well.
With OpenAI CEO Sam Altman trying to reduce his company’s reliance on Microsoft’s infrastructure, and their departure from Scale AI happening at the same time, it’s safe to say the team at OpenAI has a lot on its plate for the rest of 2025.
