"It's representative of how dealmaking with big players can be a double-edged sword in the age of AI. For some, like Scale AI cofounder Alexandr Wang, who's now a high-level Meta exec, the deal was a windfall. However, according to interviews with five current and former contractors and internal correspondence obtained by BI, Scale AI has faced some inner turmoil following the Meta deal."
"Not all of Scale AI's issues are related to the Meta deal. A BI investigation this June found Scale AI routinely used public Google Docs for work with its Big Tech clients. (There was no indication of a breach, and Scale did lock down the documents after BI's report about the issue.) It also faced litigation over claims it misclassified and underpaid contract workers."
Meta purchased a 49% stake in Scale AI, triggering five turbulent months marked by pay cuts, employee poaching, and strategic pivots. The startup's cofounder took a senior role at Meta, and some Big Tech clients paused contracts because Meta became a major backer. Additional problems included use of public Google Docs for client work and litigation alleging misclassification and underpayment of contractors; Scale locked down documents and disputes claims of business decline, saying the current quarter is on track to be its biggest. The situation highlights how partnerships with dominant tech firms can create operational and competitive risks for AI startups.
Read at Business Insider
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