The decision follows a major shift in leadership and ownership, after Meta acquired a 49% stake in the company and recruited founder and CEO Alexandr Wang to lead its new Superintelligence Labs division.
The company’s interim CEO, Jason Droege, said the job cuts were necessary due to overly rapid expansion in the generative AI (GenAI) division, according to an email obtained by Business Insider.
“We ramped up our GenAI capacity too quickly over the past year. While that felt like the right decision at the time, it’s clear this approach created inefficiencies and redundancies,” he wrote in an internal memo. Droege also pointed to “excessive bureaucracy” and a lack of clarity in team missions as factors contributing to the restructuring.
As part of the reorganisation, Scale AI will consolidate 16 GenAI teams into five core groups to improve efficiency and focus on profitable areas.
The layoffs were reportedly abrupt, with some affected employees locked out of company systems before being officially notified.
Impacted staff will continue receiving regular pay through mid-September and will be eligible for severance packages if they agree to standard termination conditions.
Despite the cuts, Scale AI maintains that it is well-capitalised and plans to increase investment in enterprise, government, and international AI operations throughout the second half of 2025.
The timing of the layoffs has raised concerns among Scale AI’s key customers. Industry sources indicate that major partners, including Google, OpenAI, and xAI, are considering scaling back or severing ties with the company due to data security concerns and potential conflicts of interest stemming from Meta’s new ownership role.
RELATED STORIES
