April 19, 2024
Reddit Secures Exclusive AI Content Licensing Deal

Reddit Secures Exclusive AI Content Licensing Deal with Google

Social media platform Reddit has entered into a deal with Google, allowing its content to be used for training the search engine giant’s artificial intelligence models, according to sources familiar with the matter. The contract with Google’s parent company, Alphabet, is reportedly valued at around $60 million per year.

This strategic move comes as Reddit, gearing up for a high-profile stock market debut, seeks additional revenue streams amid stiff competition for advertising dollars from platforms like TikTok and Meta Platform’s Facebook. The agreement highlights Reddit’s efforts to generate new revenue streams, especially in the lead-up to its anticipated initial public offering (IPO). While preparing for the IPO, Reddit is taking steps to monetize its content and diversify its income sources.

The company’s decision to charge companies for access to its application programming interface (API) was announced last year, with the deal with Google being the first reported collaboration with a major AI company. Reddit, headquartered in San Francisco, is expected to file for its IPO this week, providing potential investors with detailed financial information for the first time.

The company, valued at approximately $10 billion in a 2021 funding round, plans to sell about 10% of its shares in the offering. The move towards partnerships with AI companies is part of a broader trend, with makers of AI models actively securing agreements with content owners to diversify their training data beyond internet scrapes.

The practice aims to address potential copyright issues, as content creators have raised concerns about unauthorized use of their content. Founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, Reddit is renowned for its diverse range of niche discussion groups, some boasting tens of millions of members.

If Reddit proceeds with its IPO, it will mark the first public offering of a major social media company since Pinterest’s IPO in 2019. The deal with Google underlines Reddit’s strategic initiatives as it navigates the complexities of the digital landscape and prepares for a significant market debut.

Image by Vectonauta on Freepik

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