After Meta acquired a 49% stake, the AI unicorn Scale faced a wave of customer losses, with Google leading the "exodus."

A $29 billion deal, which should have been the crowning moment for the AI data unicorn Scale AI, is rapidly evolving into a catastrophic customer avalanche.

On June 13, media reports indicated that after Meta announced its acquisition of nearly half of Scale AI's shares, the latter's largest client, Google, is planning to cut off its collaboration with Scale AI worth hundreds of millions of dollars. Last year, Google spent approximately $150 million on Scale AI's services.

Reports pointed out that besides Google, other major clients like Microsoft are also distancing themselves from Scale AI, and Musk's xAI is similarly seeking to exit. OpenAI had already reduced its collaboration with Scale months ago, although its CFO stated on Friday that they would continue to maintain a business relationship.

Analysts indicate that the logic behind this collective "exodus" is clear and brutal: AI companies are concerned that collaborating with Scale AI will expose their R&D focus and technology roadmap to Meta, a core competitor. In the data labeling service process, clients often need to share proprietary data and prototype products, and Meta's 49% stake means that a competitor's business strategies and technological blueprints could be leaked.

The Cost of Trust: Google Leads the "Exodus"

The shockwaves from this deal have come exceptionally swiftly.

Reports cite informed sources revealing that as Scale AI's largest financial backer, Google originally planned to pay about $200 million this year to obtain the manually labeled data needed to build its large model, Gemini. However, following the news of Meta's investment, Google has quickly begun negotiations with several competitors of Scale AI this week, seeking to transfer the majority of its workload as soon as possible.

Jonathan Siddharth, CEO of Scale AI competitor Turing, stated:

The Meta and Scale deal marks a turning point; leading AI labs realize that neutrality is no longer optional but a necessity.

According to reports, another competitor, Labelbox's CEO Manu Sharma, revealed that the company expects to generate "hundreds of millions of new revenue" from clients lost by Scale before the end of the year. Garrett Lord, CEO of Handshake, a company focused on building networks of PhDs and experts, stated:

After the news broke, our demand doubled overnight.

For Google, this decision is not impulsive. Reports cite three sources stating that Google has been seeking diversification of data service providers for over the past year.

Meta's actions this week have become the last straw that broke the camel's back, prompting Google to resolve to "disconnect" from Scale AI on all key contracts. Due to the unique structure of data labeling contracts, this divestment process could proceed very quickly.

"Data Sovereignty" Alert: When Suppliers Become Competitors

Google's fierce reaction reveals the brutal nature of competition among AI giants For companies that are fiercely competing with Meta for cutting-edge AI models, continuing to collaborate with Scale AI is tantamount to exposing their research focus and technology roadmap to their number one competitor.

In collaborations, clients typically share trade secrets with Scale AI, including proprietary data and product prototypes. Now, with Meta holding a 49% stake and gaining deep control, companies like Google and Microsoft are increasingly concerned that Meta may gain insights into their business strategies and technological blueprints. Scale AI's CEO Alexandr Wang will directly enter Meta to lead its AI business, further exacerbating market panic.

Reports indicate that this "exodus" is far from limited to just Google. According to a source, Microsoft and Musk's xAI are also seeking to exit their collaboration with Scale AI. Although the funding is significantly less than Google's, OpenAI decided a few months ago to reduce its collaboration with Scale AI. However, OpenAI's CFO stated last Friday that the company will continue to work with Scale AI, viewing it as one of many data suppliers.

In response to client concerns, a spokesperson for Scale AI emphasized in a statement that its business (covering collaborations with large companies and governments) remains strong and promised to protect client data. However, the company declined to comment on the specifics of its situation with Google.

The Gamble Behind: Meta's AI Ambitions and Scale's Difficult Choices

Behind this gamble lies Meta's ambition to catch up with the AI wave.

According to previous reports from Wall Street News, Meta's Llama 4 large language model, released in April this year, failed to meet market expectations, putting it under pressure to avoid falling behind in the AI race. Through this deal, Meta not only brings Scale AI, a key data supplier, into its fold.

For Scale AI, this deal has skyrocketed its valuation from $14 billion to $29 billion, undoubtedly providing substantial returns for its investors (such as Accel and Index Ventures) and employees.

Reports emphasize that while Scale AI's business in areas like autonomous driving and the U.S. government is expected to remain stable, losing orders from top AI labs like Google and Microsoft poses a serious threat to its projected revenue of up to $870 million in 2024.

Some analysts suggest that this seemingly glamorous deal could ultimately become a Damocles' sword threatening its core business