Google is reportedly preparing to end its partnership with Scale AI, its largest data labeling vendor, following Scale AI’s recent deal with Meta. This strategic shift signals intensifying competition and evolving alliances among the world’s leading technology companies as the race to dominate AI heats up.

According to sources familiar with the matter, Google, which has long relied on Scale AI for high-quality data labeling services crucial to training its advanced AI models, is now planning to sever ties with the San Francisco-based startup. The move comes just weeks after Scale AI announced a significant partnership with Meta, Facebook’s parent company, to provide similar data labeling and annotation services.

For years, Google has been Scale AI’s largest and most influential customer, leveraging the company’s expertise to accelerate the development of products like Google Search, Google Cloud AI, and other machine learning initiatives. The abrupt change is expected to have far-reaching implications for both companies and the broader AI ecosystem.

Industry insiders suggest that Google’s decision was triggered by Scale AI’s high-profile deal with Meta. As tech giants increasingly view AI capabilities as a core competitive advantage, the sharing of critical data infrastructure partners has become a sensitive issue. By onboarding Meta as a major client, Scale AI may have inadvertently crossed an invisible line, prompting Google to reconsider the strategic risks of sharing a key vendor with a direct rival.

This move underscores the growing importance of exclusivity and control in the AI arms race. With AI models becoming ever more sophisticated and data-hungry, the ability to secure proprietary data pipelines and annotation services is now seen as vital to maintaining a technological edge.

For Scale AI, the loss of Google as its largest customer could mean a significant hit to its revenue and market positioning. However, the new partnership with Meta—another AI powerhouse—may help offset the impact and open doors to further deals within the Meta ecosystem. Scale AI’s CEO, Alexandr Wang, has previously emphasized the company’s commitment to neutrality and serving multiple industry leaders, but this latest development may force a strategic reassessment.

Google, meanwhile, is likely to explore alternative data labeling solutions, either by ramping up its in-house capabilities or by partnering with other specialized vendors. The split could also accelerate Google’s investment in automated data labeling and synthetic data generation, areas where the company has already made substantial progress.

This high-profile split highlights the increasingly competitive and protective nature of the AI industry. As companies like Google, Meta, Microsoft, and OpenAI pour billions into AI research and infrastructure, partnerships and vendor relationships are under greater scrutiny. The Scale AI episode may prompt other tech giants to revisit their own vendor strategies, seeking greater exclusivity or even acquiring key partners outright.