Scale AI made another round of cuts to its workforce: Insider

Scale AI made another round of cuts to its workforce: Insider

Scale AI has announced another round of workforce cuts, further exacerbating the company's ongoing turmoil. The latest layoffs come amidst a legal battle with rival Mercor over allegations of corporate espionage and the fallout from Meta's $14.3 billion investment. This move underscores the company's struggle to navigate a rapidly evolving AI landscape.

Scale AI, a leading data-labeling giant, has been grappling with a series of challenges since Meta's significant investment. The deal, which granted Meta a 49% stake, was intended to secure Scale's founder, Alexandr Wang, to lead Meta's new superintelligence lab. However, the move has led to a loss of client confidence and a series of layoffs. In July, just one month after the Meta deal, Scale AI laid off 14% of its workforce, affecting 200 full-time employees and 500 contractors [1].

The latest round of cuts, while not specified in the provided materials, is a reflection of Scale AI's ongoing crisis. The company has faced a client exodus and layoffs since its controversial partnership with Meta. The legal battle with Mercor, alleging the theft of trade secrets and customer strategies, further complicates Scale AI's situation. The lawsuit, filed in a California court, names former Scale AI executive Eugene Ling as a defendant [1].

Scale AI's response to the lawsuit and the ongoing legal battle has been swift and assertive. A spokesperson characterized Mercor's offer to destroy the allegedly stolen documents as an attempt to destroy key evidence, stating, "we won't allow anyone to take unlawful shortcuts at the expense of our business" [1].

The industry-wide loss of confidence created by the Meta deal has led to a market realignment, with competitors like Surge AI seeking up to $1 billion in new capital to absorb fleeing clients [1]. The lawsuit against Mercor can be seen as a defensive maneuver by a company under immense pressure, aiming to protect its remaining assets—its intellectual property—in an increasingly hostile market.

The ongoing legal battle and workforce cuts highlight the challenges faced by Scale AI in the competitive AI data industry. The company's ability to navigate these challenges and regain client trust will be crucial to its long-term success. Investors and financial professionals should closely monitor the situation as it unfolds.

References:
[1] https://winbuzzer.com/2025/09/03/scale-ai-sues-rival-mercor-for-corporate-espionage-deepening-crisis-after-metas-14-3-billion-deal-xcxwbn/
[2] https://www.ainvest.com/news/ciena-stock-surges-18-earnings-plans-workforce-reduction-2509/
[3] https://theoutpost.ai/news-story/salesforce-cuts-4-000-support-jobs-as-ai-takes-over-customer-service-19777/