The AI Land Grab: Meta’s $14B Scale Deal with Strings Attached
The moment Meta wrote a $14.3B check for 49% of Scale AI, the entire AI industry hit the panic button. Within days, Google started winding down projects. OpenAI & Microsoft began backing away.
Is the era of AI collaboration over before it started?
Here's what happened: Mark Zuckerberg cut a massive check to a 28-year-old named Alexandr Wang (Co-Founder of Scale AI). Within days, that deal started unraveling partnerships and triggered a new phase in tech competition. [NEWS]
Companies that shared the same vendors for years? They suddenly couldn't trust each other. The polite AI world where everyone played nice? Getting a lot more complicated.
This is the story of how AI went from friendly competition to serious strategic warfare. And why the winners of this $250B+ battle will decide what happens next in tech.
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What Actually Happened
Picture this: You're a contractor making good money helping Google train its AI through Scale AI. In June 2025, Meta announces its Scale AI deal. Soon after, your project starts getting phased out, and partnerships begin unwinding.
That's the real story here. Scale AI was one of the major companies that big tech used to train their AI models. Google, OpenAI, Microsoft, Meta—they all paid Scale AI to make their AI smarter.
Then Meta bought 49% of the company—without voting rights, but with massive influence. And everyone else started getting nervous.
Why? Because sharing your AI trainer with your biggest competitor's major partner is like letting them peek at your playbook. Google spent about $150M with Scale AI in 2024. That's roughly 17% of Scale's total revenue. Now that relationship gets complicated when Meta has such deep ties to the company.
Google's response was swift. They started winding down projects. OpenAI, which had already been reducing its reliance on Scale AI, accelerated the process and formally ended the partnership. The fallout is still ongoing as companies adapt to this new reality.
Why this matters: Scale AI isn't just another startup. It's the behind-the-scenes company that makes AI work.
Think of it this way: Scale AI is like the gym trainer for AI. They take messy data and turn it into the clean, organized information that teaches AI how to be smart. Without companies like Scale AI, ChatGPT would be useless.
When Meta invested heavily in Scale AI and brought CEO Alexandr Wang over to lead their new "superintelligence" unit, they didn't just buy a service provider. They potentially gained insight into how their competitors train their AI systems. That's like investing in the company that coaches both the Lakers and the Celtics, then hiring their head coach.
No wonder everyone started looking for alternatives.
The New Rules
The Scale AI situation revealed new truths about AI competition:
1. Data is everything, and everyone wants to control it
Scale AI processes the information that makes AI smart. When Meta made their massive investment, competitors realised they'd been sharing critical infrastructure with their rival's new partner—especially given that Google was Scale's largest customer.
2. The "we're all friends" era is getting complicated
For years, AI companies shared vendors and even collaborated on research. OpenAI used Scale AI. So did Google. So did Microsoft. Everyone was comfortable with shared infrastructure.
Meta's move changed that calculation. The message became clear: strategic partnerships matter more than ever.
Everyone Else is Buying Too
Meta’s partial acquisition of Scale is not all. AI M&As have just started, and we are going to witness more crazy deals in 2025.
M&A deals in AI have been rapidly increasing since 2024.
Here are some noteworthy acquisitions:
Salesforce's Crazy Month
While everyone focused on Meta's Scale AI bomb, Salesforce went on one of the most aggressive shopping sprees in recent tech history.
In 30 days, they announced three major deals:
May 15: Convergence.ai ($150-200M for AI helpers)
May 27: Informatica ($8B for data tools)
June 2: Moonhub (AI hiring tools)
CEO Marc Benioff calls it building "the ultimate AI-data platform." Translation: they're buying everything they need so they don't have to depend on anyone else.
The Strategy
Salesforce's buying spree shows the new playbook every major tech company is following:
Buy everything you need: From data tools (Informatica) to AI helpers (Convergence) to hiring software (Moonhub), Salesforce is building a complete system where everything works together.
Buy instead of build: Why spend years building AI when you can just buy proven teams and technology?
Lock in customers: By combining all these purchases into one platform, Salesforce makes it almost impossible for customers to leave. Want AI? You need their data tools. Want data tools? You need their AI.
It's brilliant and ruthless.
The buying frenzy is spreading:
AMD vs. NVIDIA: AMD bought Brium to help software work on their chips instead of just NVIDIA's. They're tired of NVIDIA dominating AI hardware.
Legal gets consolidated: Consilio bought TrueLaw to become "the world's largest legal AI company." Lawyers are getting AI'd.
Design meets data: Canva bought MagicBrief to expand beyond making pretty pictures into analysing ad performance.
Coding gets easier: Wix bought Base44 for $80M to let people create software just by talking to it.
Same pattern everywhere: buy the missing piece, integrate fast, and make it harder for competitors to catch up.
What this means:
This buying wave is creating a totally different AI world:
Fewer big players: Instead of hundreds of small AI companies, we're heading toward maybe 5-10 giants that own everything.
Harder to start new companies: New AI startups will struggle when every major player controls their own tools and data.
Less easy sharing: The open-source, "let's all work together" culture that made AI explode is getting more complex. Companies are becoming more strategic about partnerships.
Winner takes all: Companies that successfully combine their purchases will dominate. Those that don't will get bought or die.
By the numbers:
Here's how much money we're talking about:
Meta: $14.3B for 49% of Scale AI
Salesforce: $8B+ in 30 days
Amazon: $8B+ in Anthropic
That's over $30B in AI deals in recent months. For perspective, that's almost 55% of venture capital invested in AI startups in 2023.
The money is absolutely bonkers.
What’s next:
Expect more blockbuster deals as remaining AI infrastructure companies become must-have acquisitions. Companies like Hugging Face (AI model hosting), Weights & Biases (AI development tools), and Pinecone (vector databases) are likely acquisition targets.
The big question isn't whether more consolidation is coming—it's who will be left standing when the dust settles.
The AI land grab is just getting started. And unlike the internet boom of the 2000s, this time the winners aren't just building platforms—they're buying the entire supply chain.
See you next time.
Thanks,
Sangam