Mercor, a startup that helps some of the biggest tech companies train their AI models, told thousands of its contract workers this week that they would no longer be working on a large project for Meta.
On Tuesday, people working on the project, codenamed Musen, were told it was ending due to “project scope changes,” according to an email seen by Business Insider. Soon after, contractors were offered work on a similar new project named Nova, which would pay $16 an hour — $5 less than the hourly rate for Musen.
Mercor, which was founded by three Thiel fellows and recently valued at $10 billion, is part of an industry of data-labeling companies that are powering the AI boom. Companies such as Meta and OpenAI hire these firms, which use humans to tag and categorize data such as text and videos to improve the reliability of AI models and chatbots.
More than 5,000 people were working on the Musen project at its peak, according to two people who worked on it. The news came as a surprise because they had recently been told the Musen project would run until the end of the year, according to several contractors who worked on the project.
A Mercor spokesperson said the information was “inaccurate,” but declined to comment on what details the company objected to. A spokesperson for Meta declined to comment.
“We are transparent throughout the duration of the opportunity (role descriptions, onboarding materials, etc.) that this is temporary, project-based work,” the Mercor spokesperson added.
Project end ‘took everyone by surprise’
After Meta invested $14.3 billion in Scale AI earlier this year and hired its CEO, Mercor and other labeling companies scooped up more business from clients that cut their ties with Scale. In June, Mercor’s head of product, Osvald Nitski, told Business Insider that it works with six of the “Magnificent Seven” tech companies and is picking up projects from clients leaving Scale.
Mercor also said last month that it manages over 30,000 contractors and pays over $1.5 million a day to its workforce of human trainers.
Contractors working on the Meta project carried out a variety of tasks, including evaluating prompts between models to rank which was better. One of them told Business Insider the Musen project had been running for several months but was often paused and restarted to accommodate contractors working in different time zones.
“They kept stressing how happy the client was and how it got extended until the end of the year,” that person said. “So to then do this major switch up before the holidays took everyone by surprise.”
The scrapped Mercor project was first reported by Forbes.
Two people who were given the Nova offer said the work appeared similar to what they were doing on Musen. An email sent out to workers said the new project would have “steadier task volumes across multimedia content” and “higher hour caps, enabling greater weekly engagement.” It said the new $16 rate was chosen to “offer greater earning stability and consistent access to work, rather than fluctuating opportunities.”
One contractor who worked on Musen and has since joined Nova told Business Insider the two projects had the same tasks “but for $5 less an hour.”
“It sounds like most of us are in the same boat,” they added. “We wanted to boycott this but are not in a financial place to do so. We needed to have the guaranteed income, even if it’s demoralizing.”
Three Mercor workers told Business Insider that $16 was particularly low, with some contractors having previously earned as much as $60 an hour for different projects for the company. Another said a different previous project was shut down and replaced with a similar one that offered $10 less per hour.
In a September podcast appearance, Mercor’s CEO, Brendan Foody, said that the most important aspect of the business was quality and “having phenomenal people that you treat incredibly well.”
He added that Mercor’s average pay rate is $95 an hour, while he said rivals like Scale and Surge pay about $30 an hour.
There have been cuts across the data labelling industry in recent months. Scale AI slashed a team of contractors focused on “generalist” work last month. In September, Elon Musk’s AI company, xAI, eliminated more than 500 data labellers as a part of a strategic shift to prioritize higher-paid specialist roles.