FILE PHOTO: Meta logo is seen in this illustration taken, August 22, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) -Facebook-owner Meta has finalized the $14.3 billion purchase of a 49% stake in data-labeling startup Scale AI, according to two sources familiar with the matter.
Scale said late on Thursday that the deal values it at $29 billion and its CEO Alexandr Wang will join Meta to play a prominent role in the Facebook owner's AI strategy.
Scale's chief strategy officer, Jason Droege, will serve as its interim CEO, Scale AI said. The company did not respond to a request for additional information on the financial details of the transaction.
The deal would rank as Meta's second-largest ever after its $19 billion buyout of WhatsApp. The sources declined to be identified because the information was not public.
By poaching Wang, who does not come from a research background but was able to build one of the largest businesses in fueling useful data essential for model training for AI labs, Meta CEO Mark Zuckerberg is betting that Meta's AI efforts can be turned around by an adept business leader more in the mold of OpenAI's Sam Altman than the research scientists at the helm of most competing labs.
Since many of those labs have contracted Scale for data services, Zuckerberg could also obtain an inside track into his rivals' priorities around data, one of the key ingredients for developing today's AI models.
Scale was valued at nearly $14 billion in a May 2024 funding round where the company raised $1 billion from backers including tech giants Nvidia, Amazon and Meta.
Founded in 2016, Scale AI provides vast amounts of accurately labeled data, which is pivotal for training sophisticated tools like OpenAI's ChatGPT.
To do so, Scale set up subsidiary platforms such as Remotasks and Outlier to recruit and manage gig workers who manually label the data.
Wang, the 28-year-old co-founder, has steered the company to provide data labeling services across the buzzy tech sectors of the moment, from autonomous vehicles several years ago to generative AI today.
(Reporting by Rishabh Jaiswal, Krystal Hu and Kenrick Cai; Editing by Alan Barona and Jamie Freed)
