Meta has taken a major step in its AI ambitions by investing $14.3 billion in Scale AI, acquiring a 49% stake in a deal that values the data-labeling startup at $29 billion. The primary motive behind the massive investment is to bring on board Scale's 28-year-old CEO, Alexandr Wang, to lead Meta’s newly created superintelligence division.

According to sources familiar with the matter, Wang's hiring was the central reason behind the deal. Meta confirmed that it will deepen its collaboration with Scale on producing training data for AI models and that Wang will play a major role in Meta's AI strategy. Though Meta didn’t disclose financial specifics, insiders say the social media giant will not take a seat on Scale’s board.

Wang, who co-founded Scale after dropping out of MIT, quickly rose to prominence in Silicon Valley and became a billionaire in his 20s. Known for his close ties with top tech leaders like OpenAI’s Sam Altman and his work with the U.S. government, Wang brings a strong business-oriented approach to AI, unlike most research-driven lab leaders. His move to Meta signals a strategic shift by CEO Mark Zuckerberg, betting on a business-savvy leader to revive Meta’s AI competitiveness.

Scale’s chief strategy officer, Jason Droege, will serve as interim CEO, while Wang remains on the company’s board. Some employees from the 1,500-person Scale team will also transition to Meta. Wang informed his staff of the move in a company-wide message. The investment is Meta’s second-largest after its $19 billion acquisition of WhatsApp and may draw regulatory attention. The FTC has previously accused Meta of anti-competitive practices with its past acquisitions.

Founded in 2016, Scale supplies high-quality labeled data crucial for training advanced AI systems like ChatGPT. It operates gig platforms like Remotasks and Outlier to manage data labelers. The company was valued at nearly $14 billion just last year, with backers including Nvidia, Amazon, and Meta. However, the deal might complicate Scale's client relationships, as some AI labs may be wary of Meta potentially gaining indirect insights into their data operations due to Wang's continued presence on Scale's board. Despite those concerns, the transaction is a major win for early investors such as Accel and Index Ventures, who will now have the opportunity to liquidate part of their stakes.