Meta invests billions to catch up with AI race

Meta intends to make a "significant" equity investment in the $29 billion artificial intelligence startup Scale AI, a sign of the Facebook parent company's accelerating push into AI.

Scale AI did not respond to an AFP request for comment on the size of this stake, which US media reported at 49%, and its statement issued Thursday indicated only a minority stake.

Meta confirmed this deal, which it described as a "strategic partnership," according to a statement sent to AFP.

To acquire 49% of Scale AI shares at this valuation, Meta would have to pay just over $14 billion.

This would be the company's second-largest investment, after spending $19 billion to acquire WhatsApp in 2014.

This deal is based on a valuation more than double the estimated value of Scale AI's last funding round in May 2024.

Meta invested in the company at the time, as did Amazon, Intel, and AI chip leader Nvidia, which valued the San Francisco-based startup at $13.8 billion.

Scale AI is a relatively unknown company that specializes in processing the data used to develop large-scale generative AI models.

The quality of the data that powers these programs is often considered as important as the models themselves, given their critical role in generating the results produced by generative AI.

Meta's initiative, which has been rumored for days, aims to join the AI ​​race, as the group faces some skepticism about its results to date.

The latest version of its Llama 4 Large Model (LLM), released in early April, was not well received, with some critics criticizing what they considered disappointing performance in several areas, particularly programming.

Adding insult to injury, the Menlo Park, California-based company submitted a version of Llama 4 to the generative AI benchmarking platform LMArena that was not comparable to the publicly available version, in an effort to achieve better results.

This setback is even more significant given Meta's billions of dollars in investment in generative AI, making it a strategic priority.

Several US media outlets have reported that the company's main AI competitors have successfully poached several Meta engineers.

As part of the deal announced Thursday, Alexander Wang, CEO of Scale AI, will join Meta to "participate in our work on superintelligence," according to the Mark Zuckerberg-led group.

Meta explained, "We will share more in the coming weeks about this project and the outstanding individuals who will join the team."

According to the New York Times, the social media empire plans to establish a research lab for "superintelligence," the stage at which AI reaches a level of reasoning and understanding that surpasses that of humans.

Jason Droege, the current chief strategy officer at Scale AI, will serve as the company's interim CEO.

Some observers interpret Meta's initiative as an expensive way to attract top AI talent, including Alexander Wang, who founded Scale AI in 2016 when he was just 19 years old.

Media reports indicate that Mark Zuckerberg was personally involved in the project and directly involved with the young executive.

In a letter to Scale AI staff, he indicated that he would bring other engineers with him to Meta, and US media reported dozens of employees involved in the move.

The CEO of Scale AI indicated that he accepted Meta's offer in part because it allowed employees to buy back shares, which had previously been difficult to sell because the company was not publicly listed.