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Mark Zuckerberg is making major moves to establish Metas role in the fast-changing world of artificial intelligence (AI). In a big deal he has partnered with a major player in the AI world who could help push Metas AI aspirations further. To finalize this arrangement it is reported that Zuckerberg invested a whopping $14 billion. According to the media reports that Meta has acquired a company named Scale AI. However the truth is that Meta simply made a large investment in Scale AI-it didnt acquire the company. If it was an acquisition then Meta would have had to buy all shares of Scale and all employees would have had to either receive Meta stock or cash out in some manner. This did not happen. Instead Meta invested $14 billion in Scale AI which raised the valuation of Scale to $29 billion and then made Metas stake nearly 49%. Scale is still a separate company and its board was unchanged. However where there is this level of influence it is very likely that the company is going to fall directly in line with Mark Zuckerbergs vision. Alexandr Wang is the founder and CEO of Scale AI and he was critical to making this deal happen. Wang is joining Meta but will remain on the board of Scale. With Meta and Wangs combined stake they have potential control of Scale AI now. To put it another way for the foreseeable future key decisions for Scale AI could practically be dictated by Meta. The deal was so large that some thought of Meta as buying the company outright. In fact a significant amount of the capital ultimately went to Scale AI’s employees because they were able to cash out their shares-partially of course-but retain and cash in a percentage of their ownership. This allowed them to profit immediately while also staying invested in the company’s future growth. Its said that this idea came from Alexandr Wang himself ensuring that his team benefitted alongside him and didn’t get left behind. The most interesting thing about this acquisition is that it seems like Meta is not truly interested in Scale AIs core businesses. Scale AI is primarily a data labeler—providing the prep work for training machine learning models which is usually a human-intensive task. It is also a low-tech task and therefore low in innovation. Scale works a lot with big clients such as Toyota General Motors and various governments who want to adopt AI except have no idea how to build AI. For Meta a tech of its size Scales business does not seem to quite fit either. Meta is not building a B2B data service business and Scales datasets are not valuable enough as datasets to warrant a deal on that level. The real purpose for the deal it seems Meta wanting to acquire Alexandr Wang the CEO behind Scale AI. This is not unprecedented. Google invested in Character AI and lured some of their best employees onto their Gemini team. Microsoft did something similar with Inflection AI. So why is Alexandr Wang so significant? In the modern tech race the player that builds the strongest large language models (LLMs) will win the game. It is a race to claim market territory. There remain many who claim they can build LLMs but success is impossible without the right data enormous compute and the ability to scale. Users will always go with the highest-performing model. When it comes to this game second best doesn’t matter. Meta has not kept pace in the AI race to date. OpenAI has already claimed the consumer software market with ChatGPT and Google and Anthropic are established developer players. Meta has models made like Llama 2 but they have not been able to put the flag in the ground claiming first in what is becoming a heated market. To this point Metas play has been to keep it open-source and this was enough to gather a broad audience of developers and researchers. Now Meta understands open source can take them only so far. They need a visionary leader capable of defining their AI future; in this case Alexander Wang is expected to be that leader. Meta is falling considerably behind in the AI race. OpenAI has taken the consumer space using ChatGPT and Google and Anthropic have taken the developer space. While Meta has developed some models like Llama 2 its unable to stake a claim to the top of the competitive landscape. Meta’s approach thus far has been to keep everything open-sourced and that did help garner a large community of developers and researchers. Nevertheless the company now realizes it cannot simply rely on open source. They need a lossy visionary leader to mold their AI future which is why Alex Wang is in the limelight.