Google walks away from a major AI partner because Zuckerberg has entered the chat

Five separate sources claim that Google is about to cut ties with Scale AI – an AI data-labeling company that used to do business with the search engine giant.

In fact, Google is (was?) the biggest customer of Scale AI, Reuters reports. But what is an AI data-labeling firm, exactly?

An AI data-labeling company helps teach AI by having employees look at lots of information – like pictures, videos, or text – and add helpful notes or tags to explain what that information shows. These notes are called "labels", and they tell a given AI model what it's seeing or reading. For example, someone might look at a photo and mark that there's a dog in it, or read a sentence and label it as happy or sad.

The AI then uses all this labeled data to learn how to recognize things, understand language, or make better choices when you ask it to do something for you or provide information. Basically, a student needs a teacher to explain things and AI needs this kind of labeled data to learn and improve. Without it, the AI wouldn't know what to do with all the information it's given.



The reason for Google to allegedly walk away from Scale AI is the fact that Zuckerberg's Meta (the parent company of Facebook, Instagram and WhatsApp) is buying 49% of Scale AI – almost half of the company. Google was reportedly planning to pay approximately $200 million in 2025 to use Scale AI's services to further refine Gemini, but now, the Big G will probably have to find another player in town.

It's not just Google that is taking a step back from Scale AI, apparently: Microsoft, xAI (Elon Musk's AI project) and OpenAI are somewhat nervous about Meta acquiring 49% of the data-labeling company. They all fear that if Meta partly owns Scale AI, Meta might gain access to their sensitive AI data and research ideas.

Of course, that means Scale could lose a lot of money and business, but I personally doubt they'll experience any fatal turbulence in the coming years.

At the same time, Scale's competitors (like Labelbox, Handshake, and others) are getting a flood of new customers. Some AI labs are even starting to hire their own data labelers so they can keep everything private.