Last Updated:
Meta relied on open-source to attract developers, but now seeks a visionary leader to shape its AI future—prompting the $14B bet on Alexander Wang to lead the charge
Alexander Wang’s partnership with Meta means the tech giant effectively steers Scale AI’s decisions. (News18 Hindi)
Mark Zuckerberg is reportedly under pressure as Meta struggles to keep pace in the rapidly advancing world of artificial intelligence. In a bold move to change course, Meta has made a massive investment aimed at strengthening its AI capabilities.
The tech giant has reportedly poured $14 billion into Scale AI, a leading data-labelling startup, effectively doubling the company’s valuation to $29 billion. The deal is said to give Meta a significant 49% stake in Scale AI—along with a strategic edge in the AI race.
Despite the substantial investment, Scale AI remains an independent entity with no changes to its board. Nevertheless, Meta now wields considerable influence over the company’s operations.
Alexander Wang, Scale AI’s founder and CEO, plays a pivotal role in this arrangement. Although Wang retains his position on Scale’s board, his partnership with Meta means the tech giant effectively steers Scale AI’s decisions.
The deal was substantial enough to create the impression that Meta had acquired Scale AI entirely. In reality, a significant portion of the deal benefited Scale AI’s employees, who received substantial payouts for their shares while retaining some equity. This arrangement, reportedly Alexander Wang’s idea, ensured that his team could profit from the company’s growth.
Why Is Meta Interested In Scale AI’s Business?
Meta’s interest in Scale AI is particularly noteworthy, given that the latter’s primary business involves data labelling for machine learning, a service with minimal technological innovation. Scale AI caters to clients such as Toyota, General Motors, Etsy, and various governments, providing data preparation services for those keen on adopting AI but lacking the in-house capability to develop it.
This investment in Scale AI does not align with Meta’s core business interests, as Meta is not looking to become a B2B data service company. The primary objective of the deal was to bring Alexander Wang into Meta’s fold, a strategy similar to Google’s investment in Character AI and Microsoft’s acquisition of talent through Inflection AI.
The Race To Build The Best LLM
In today’s AI-driven world, the company that builds the best Large Language Model (LLM) will dominate. It’s a battle for market leadership, where knowing how to build models isn’t enough. Without the right data, massive computing power, and the ability to scale, survival is unlikely.
Meta is currently trailing in the AI race. OpenAI has dominated the consumer space with ChatGPT, while Google and Anthropic hold strong positions in the developer ecosystem. Although Meta has released models like Llama 2, it has yet to secure the top spot in the LLM race.
Meta’s core strategy so far has focused on open-sourcing its models, which helped attract developers and researchers to its ecosystem. However, the company now believes that open-source alone isn’t enough. What it needs is a visionary leader to steer its AI future—and that’s where Wang comes in. He is seen as the ideal choice to take Meta’s AI ambitions to the next level.
- First Published:
