Scale AI Sues Rival Mercor and Former employee Over Alleged Data Theft

Scale AI is taking a former sales lead and rival startup Mercor to court, accusing both of making off with playbook-level secrets in a hard-fought market for AI training data. The lawsuit centers on Eugene Ling, who, before jumping to Mercor, allegedly carried more than a hundred proprietary files ranging from customer strategies to competitive intel straight out of Scale’s internal archive.

The company claims Ling tried to get ahead of his exit by pitching Mercor to one of Scale’s biggest accounts labeled Customer A before the paperwork on his old job had even cooled suggesting hundreds of millions could be on the line if that customer defected While Mercor has rapidly built a name training data for LLMs using academic talent and PhD level specialists cofounder Surya Midha insists his team never touched Ling’s files and even offered to work with Scale on deleting the data So far says Midha Scale hasn’t played ball.
 

This tension hits as Meta posts a headline-grabbing 143 billion for a 49 percent stake, and a suite of Scale’s top talent left Scale at a crossroads. Reports suggest rivals to Meta have already started dropping Scale as their vendor since the investment is opening cracks for upstarts like Mercor to slip in.

Still, the real surprise might be that according to Scale’s own complaint, Meta’s AI division is keeping options open, still running data through other vendors, Mercor included, even after its big money buy-in to Scale. With LLM data contracts now carrying huge price tags, the outcome of this suit could redraw the leaderboard for AI’s next wave.