Defense Contractor Scale AI Quietly Scrapped Deal With Chinese-Owned TikTok Over Security Concerns

Published on February 2, 2024



The deal was one of several challenges facing the federal business of the $7.3 billion AI startup, whose CEO Alexandr Wang has become an outspoken advocate of American national security amid the threat of China. One expert called the optics “horrible.”

In the fall of 2022, Scale AI CEO Alexandr Wang saw a huge opportunity: a deal with TikTok where his $7.3 billion AI data-labeling company would provide insights for the social media giant’s advertisers. Though the initial pilot was worth less than $1 million, Wang was convinced the upside of a larger contract could be massive, sources in position to know recalled him saying.

But as Wang pushed the deal through, members of Scale’s leadership panicked, three people with direct knowledge of the matter told Forbes. Just two years earlier former President Donald Trump had announced plans to ban TikTok, arguing the app, which is owned by Chinese company ByteDance, posed a threat to U.S. national security. And TikTok remained the subject of an ongoing national security review inspired by fears that American user data could be accessed by the Chinese Communist Party (a claim TikTok has denied).

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