Scale AI will lay off approximately 200 employees, equating to 14% of its workforce, alongside 500 contractors, just weeks after Meta's $14.3 billion investment. CEO Jason Droege cited overexpansion in GenAI capacity leading to inefficiencies. The layoffs, part of a restructuring effort, follow criticism over serious data security breaches that exposed sensitive client information. These developments raise concerns among major clients, prompting some to reconsider their partnerships.