Meta's Scale AI deal latest test of AI partnerships

Facebook owner Meta’s $14.8 billion investment in Scale AI and hiring of the data-labeling start-up’s CEO will test how the Trump administration views so-called acquihire deals, which some have criticised as an attempt to evade regulatory scrutiny.

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The deal, announced on Thursday, was Meta’s second-largest investment to date. It gives the owner of Facebook a 49 per cent non-voting stake in Scale AI, which uses gig workers to manually label data and includes among its customers Meta competitors Microsoft and ChatGPT creator OpenAI.

Unlike an acquisition or a transaction that would give Meta a controlling stake, the deal does not require a review by US antitrust regulators. However, they could probe the deal if they believe it was structured to avoid those requirements or harm competition. The deal appeared to be structured to avoid potential pitfalls, such as cutting off competitors’ access to Scale’s services or giving Meta an inside view into rivals’ operations — though Reuters exclusively reported on Friday that Alphabet’s Google has decided to sever ties with Scale in light of Meta’s stake, and other customers are looking at taking a step back.

In a statement, a Scale AI spokesperson said its business, which spans work with major companies and governments, remains strong, as it is committed to protecting customer data. The company declined to comment on specifics with Google.

Alexandr Wang, Scale’s 28-year-old CEO who is coming to Meta as part of the deal, will remain on Scale’s board but will have appropriate restrictions placed around his access to information, two sources familiar with the move confirmed. Large tech companies likely perceive the regulatory environment for AI partnerships as easier to navigate under President Donald Trump than under former President Joe Biden, said William Kovacic, director of the competition law centre at George Washington University.