Meta Reportedly Considered Perplexity Acquisition Before $14.3B Scale AI Deal

Meta Platforms (META) reportedly explored acquiring AI search startup Perplexity before opting to make a multibillion-dollar investment in Scale AI.

According to a Bloomberg report, which did not disclose the financial details of the discussions, Perplexity and Meta couldn’t come to an agreement, which is why they decided not to pursue the deal. However, according to the publication's timeline, the talks took place prior to Meta finalizing its investment of $14.3 billion in Scale AI for a 49% stake.

Meta’s stock was down over 1.2% in Friday afternoon trading. However, retail sentiment on Stocktwits was in ‘bullish’ territory, up from ‘neutral’ a day ago. The shares have gained more than 16% this year and 36% over the last 12 months.

As per a CNBC report, Meta founder Mark Zuckerberg also tried to acquire Illya Sutskever’s startup Safe Superintelligence earlier this year, but was rebuffed. Following this, Zuckerberg reportedly hired the startup’s CEO Daniel Gross and former Github CEO Nat Friedman, who are joining Meta as a part of transition and will be working on products under Scale AI co-founder Alexandr Wang.

Meta’s investment in Scale AI is reportedly putting other tech giants at arm's length. According to another report by Business Insider (BI), Google (GOOG/GOOGL), OpenAI, and Elon Musk’s xAI have paused some Scala AI projects. 

Google had reportedly been winding down its work with Scale AI even before the announcement was official. 

A smaller Scale AI investor told BI that they plan on selling their remaining stake in the startup because Meta’s investment is unlikely to make up for the loss of business from the tech giants. 

According to reports, Meta founder Mark Zuckerberg’s acquisition of Scale AI was driven by the lack of progress in generative AI within the organization. Hiring Scale AI’s Wang to head Meta’s new ‘superintellegence’ unit was a key part of the deal.

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