Meta Platforms Inc. is reportedly in discussions to make a substantial multi-billion dollar investment in the artificial intelligence startup Scale AI. According to people familiar with the matter, this financing could see Scale AI valued at over $10 billion, potentially making it one of the largest private company funding events ever recorded. However, the terms of this significant deal are not yet finalized and remain subject to change.

This potential investment would represent Meta's largest external AI venture to date and signals a notable strategic move for the social media giant. Historically, Meta has primarily relied on its extensive in-house research capabilities and a more open development strategy to advance its AI technology. This contrasts with other major technology companies; Microsoft, for example, has invested over $13 billion into OpenAI, while Amazon.com Inc. and Alphabet Inc. have both committed billions to the rival AI firm Anthropic.

Meta's Chief Executive Officer, Mark Zuckerberg, has unequivocally identified artificial intelligence as the company's foremost priority. In January, he announced plans for Meta to spend as much as $65 billion on AI-related projects within the current year. A key part of Meta's AI ambition is to establish its Llama large language model as an industry standard worldwide. The company's AI chatbot, already integrated into Facebook, Instagram, and WhatsApp, reportedly serves 1 billion users monthly. Unlike its peers, Meta does not operate a large cloud computing business, making the exact format of its potential investment in Scale AI—whether cash, compute credits, or a hybrid—a point of interest.

Scale AI, co-founded in 2016 by CEO Alexandr Wang, has rapidly become a key player in the generative AI boom. The startup specializes in providing crucial data labeling services, which are essential for companies looking to train sophisticated machine-learning models. It is backed by prominent tech giants including Nvidia, Amazon, and Meta. Scale AI's key customers for its services include major technology players such as Microsoft Corp. and OpenAI. Beyond data labeling, Scale AI also provides a platform for researchers to exchange AI-related information, with contributors spanning over 9,000 cities and towns.

Scale AI's growth trajectory has been impressive. The startup was last valued at approximately $14 billion in a 2024 funding round, which notably included backing from both Meta and Microsoft. Earlier this year, Bloomberg reported that Scale AI was also in discussions for a tender offer that could value it at an even higher $25 billion. In terms of financial performance, Scale AI generated revenues of $870 million last year and projects that its sales will more than double to $2 billion in 2025. The company's core service involves employing numerous contract workers to meticulously clean, tag, and organize images, text, and other forms of data for AI training, underscoring the principle that AI quality is heavily dependent on the quality of its input data.

A significant area of shared interest between Meta and Scale AI lies in defense technology. Meta recently announced a new partnership with defense contractor Anduril Industries Inc. to develop advanced products for the US military, including an AI-powered helmet equipped with virtual and augmented reality features. Furthermore, Meta has granted approval for US government agencies and defense contractors to utilize its AI models. This aligns with their collaborative efforts on a program known as "Defense Llama"—a specialized version of Meta’s Llama large language model designed for military applications.

Scale AI has also been increasingly active in collaborating with the US government to develop AI solutions for defense purposes. Earlier this year, the startup announced it had secured a contract with the Defense Department to work on AI agent technology. Scale AI described this contract as "a significant milestone in military advancement," highlighting its growing role in applying AI to national security and defense.