Scale AI sues rival "unicorn" Mercor
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Scale AI headquarters in San Francisco. Photo: Smith Collection/Gado/Getty Images
Scale AI, the AI data labeling giant backed by Meta, on Wednesday sued rival Mercor for allegedly stealing trade secrets.
Why it matters: Data labeling is unheralded work that underpins generative AI models.
Zoom in: Scale's complaint focuses on a former executive named Eugene Ling, who last month joined Mercor. Ling also is named as a defendant.
- It alleges that Ling downloaded more than 100 confidential documents, including strategies about a large customer, and shared them with his new employer.
- Per the complaint, filed in California: "As a small and new competitor vying for a share of the market, Mercor sought to bypass the time and investment required to develop its own business strategies by illicitly acquiring those of Scale, the industry leader."
- Scale also claims that it contacted Mercor about the documents, after which Mercor's lawyer "conceded" that they remain on Ling's personal Google Drive and that Ling is working on the large customer's account.
By the numbers: Scale currently is valued at around $29 billion, per a recent deal whereby Meta invested $15 billion for a 49% position. That agreement also included several Scale employees joining Meta, including CEO Alexandr Wang.
- Other Scale investors include Accel, Spark Capital, Thrive Capital, and investments arms of Amazon, Nvidia, and Cisco.
- Mercor was valued at $2 billion upon raising new money this past February from such investors as Felicis, General Catalyst, Benchmark, Sequoia Capital, and Menlo Ventures.
What Mercor is saying, via co-founder Surya Midha: "While Mercor has hired many people who departed Scale, we have no interest in any of Scale's trade secrets and in fact are intentionally running our business in a different way. Eugene informed us that he had old documents in a personal Google Drive, which we have never accessed and are now investigating. We reached out to Scale six days ago offering to have Eugene destroy the files or reach a different resolution, and we are now awaiting their response."
What Scale is saying, via spokesperson Joe Osborne: "We won't allow anyone to take unlawful shortcuts at the expense of our business ... Mercor's eventual response to us — that Eugene destroy the documents he stole — would be destroying key evidence."
Read the lawsuit:
