This summer has been marked by significant events for Scale AI as the company navigates a wave of changes, including Meta’s substantial investment and executive shifts, alongside a workforce reduction of 14 percent. The latest turn in this saga is a legal battle concerning alleged corporate espionage in the competitive field of artificial intelligence.
On Wednesday, Scale AI, a prominent name in AI data labeling, initiated legal proceedings against former employee Eugene Ling and his current employer, Mercor, which is a direct competitor.
The complaint claims Ling, previously responsible for engagement management at Scale, illicitly appropriated over 100 confidential documents that contained sensitive information and strategies relating to client management. Notably, several of these documents pertained to one of Scale’s major clients. It was alleged that Ling downloaded numerous files following a meeting with Mercor’s CEO and that he attempted to persuade this client to transition to Mercor while still employed by Scale.
In his outreach to a representative of this client, Ling reportedly expressed enthusiasm about the capabilities of his new company. The lawsuit indicates that when asked whether he meant Mercor, Ling queried if the client was already collaborating with them, proposing a further discussion over a call. Additionally, he allegedly communicated with various researchers at the client’s organization and sought to recruit multiple employees from Scale to join Mercor.
This legal action unfolds against the backdrop of a rapidly evolving AI sector characterized by frequent mergers, acquisitions, and talent movement among companies. Such transitions often result in the unauthorized flow of sensitive information, a serious concern amid heightened competition among major players like OpenAI, Anthropic, Google, Meta, and Microsoft, all vying for dominance through innovation and investment.
In a related incident, Elon Musk’s xAI has also filed a lawsuit against former engineer Xuechen Li in California, accusing him of stealing company secrets before leaving for a position at OpenAI after liquidating stock worth about $7 million.
Through its lawsuit, Scale is seeking not only legal fees and damages but also an injunction against Mercor to prevent further use of its proprietary information, along with the return of its documents. “Scale has established itself as a leader in the industry through our ideas, innovation, and execution,” remarked Joe Osborne, a spokesperson for Scale AI, in a statement to Technology News. “We are committed to protecting our business from unlawful practices.”
