Scale AI's rivals say they're going hard to win its contractors and clients: 'Our servers are melting'

Business Insider

a day ago

Meta spent $14.3 billion to acquire nearly half of Scale AI and level up in the AI race — but the startup's rivals spy an opportunity as well.
Executives at six Scale AI competitors told Business Insider that they have seen a big uptick in client inquiries and job interest since the Meta deal was announced on June 13.
Meta now holds a 49% stake in a company handling AI training data for many of its competitors, like Google, OpenAI, and xAI. In response, those three companies paused at least some of their work with Scale AI. Independence from Big Tech has now become a core part of the pitch for rival AI training companies vying for those contracts.
In a blog post following the Meta deal, Scale AI reassured clients that it remains a "neutral, independent partner."
Ryan Kolln, the CEO of data annotation firm Appen, told BI the deal would "create a pretty big disruption to our industry and create huge opportunities for Appen and our peers to fill the hole that's going to be left by Scale."
"The added pitch is, 'hey, we are a publicly listed company and we're really focused on data neutrality,'" added Kolln, whose company counts Amazon and Nvidia as clients. "Our customers are really evaluating their vendor ecosystem."
UK-based Prolific, which provides vetted freelancers for academic and commercial AI research, is also using neutrality as a selling point, its CEO, Phelim Bradley, told BI.
"We don't build models. We don't compete with our customers. We don't have conflicting incentives," Bradley said.
He added that clients are now reluctant to go all in on a single AI training provider. Big companies often spread their work among vendors, like cloud providers.
"Scale benefited a lot from their awareness and being synonymous with data labeling for Big Tech," Bradley said. "Now, it's a much easier question to answer: 'How are you different from Scale?'"
A Scale AI spokesperson told BI that "nothing has changed" about its customer data protection.
"A lot of this confusion is being driven by smaller competitors who seek to gain from promoting false claims," they added. "Security and customer trust have always been core to our business, and we will continue to ensure the right protections are in place to help safeguard all of our work with customers."
Meta did not respond to a request for comment.
Jonathan Siddharth, the CEO of Turing, which trains models for major AI labs including Meta, Anthropic, and Google, said that discussions with customers have increased tenfold as frontier labs realize they need "top talent and impartial partners."
"Labs increasingly want a Switzerland-like collaborator — someone model-agnostic — who can help them win the AGI race, rather than being tied to a single player," he said, referring to artificial general intelligence. He added that data annotation companies are often working on the exact capabilities that differentiate one AI model from another.
Talent war
Scale AI's competitors are also moving to pick up its freelance workers, some of whom have had projects they are working on paused after clients like Google halted them.
Scale has at least 240,00 gig workers globally who conduct AI training projects, such as flagging harmful chatbot responses. After some of Scale AI's projects were paused, the market became flooded with freelancers looking for work.
Sapien AI CEO Rowan Stone told BI that his company had 40,000 new annotators join within 48 hours of Meta's Scale AI deal.
"Our servers are currently melting," Stone said last week. "Our engineering team spent the entire weekend bolstering load balancers, spinning up new infrastructure, and getting us ready for the load that we're seeing."
Many of these new sign-ups were from India and the Philippines — regions where Scale AI had long been a leader, Stone added. "The change in user signup pattern coincides pretty neatly with the Scale news," he said.
Mercor AI's head of product, Osvald Nitski, said that the startup has received applications from full-time Scale employees, adding, "Our hiring bar is extremely high — we're only taking the best people."
Mercor says it works with six of the "Magnificent Seven" tech companies and is picking up projects from clients leaving Scale.
In terms of contractors, Nitski said the company is focused on recruiting elite-level annotators, like International Math Olympiad medalists, Rhodes Scholars, and Ph.D. students.
Nitski said it's been a busy two weeks at Mercor, as it has seen a sharp increase in inbound interest from major tech clients.
"There was simply no time for podcasts and blog posts these past few weeks with all of the demand to be fulfilled," Nitski said.
Nitski added that Mercor has received applications from full-time Scale AI employees, adding, "Our hiring bar is extremely high — we're only taking the best people."
Surge AI's CEO, Edwin Chen, told BI that his company saw a tangible jump in contractor sign-ups after the Meta-Scale news, and that it has work for both expert contractors and generalists.
"It's certainly true that the models are getting more advanced in capabilities. However, I think there's almost a misconception that it's only about expert data," he said.
"It still needs to learn all these general things that it simply can't do right now," Chen said. He added that models still need to be taught basic skills like using a search engine and using apps like Photoshop, Microsoft Word, or Microsoft Excel.