Just one month after Meta invested $14.3 billion for a 49% stake in Scale AI, the data-labeling powerhouse has announced a major workforce reduction, cutting approximately 14% of its staff—about 200 full-time employees—along with 500 global contractors, as the company reassesses its generative AI strategy.
The announcement was confirmed by Scale spokesperson Joe Osborne, who told The Verge that the layoffs are part of a broader restructuring intended to streamline operations and reduce internal inefficiencies. The move follows a period of rapid hiring that CEO Jason Droege now says outpaced market demand.
“The reasons for these changes are straightforward: we ramped up our GenAI capacity too quickly over the past year,” Droege wrote in an internal memo viewed by reporters. “That created too many layers, excessive bureaucracy, and unhelpful confusion about the team’s mission.”
As part of the reorganization, Scale AI will reduce its current structure from 16 pods to five core areas: code, languages, experts, experimental, and audio. Its go-to-market team will also be consolidated into a streamlined “demand generation” unit with customer-specific teams.
Despite the layoffs, Droege emphasized that Scale remains financially strong and well-positioned for future growth. The company plans to increase hiring later this year across enterprise, public sector, and international government-focused divisions. Employees impacted by the cuts have received severance packages.
Scale AI is one of the most prominent players in the artificial intelligence infrastructure space, providing human-annotated training data to firms like OpenAI, Google, and Anthropic. But the company has found itself navigating a turbulent moment for the AI industry, marked by high-profile acqui-hires, shifting R&D priorities, and rapid consolidation.
Meta’s acquisition of nearly half of Scale AI last month included a transfer of Scale’s former CEO Alexandr Wang, who now heads Meta’s newly created superintelligence lab. That move further intensified competition across top-tier AI labs, many of which are locked in a hiring race for elite technical talent.
While Scale is pulling back from certain generative AI initiatives, it is not exiting the space. The company says it will deprioritize lower-growth GenAI projects and double down on high-impact areas aligned with enterprise demand and regulatory momentum.
Internal all-hands meetings are scheduled this week, including a company-wide session on July 1