Insider insight: Reddit entering AI content license agreement with Google

This collaboration highlights Reddit's strategic move to diversify its revenue streams amidst intense competition for advertising spending
The image shows Reddit logo on phone scren. — Pexels
The image shows Reddit logo on phone scren. — Pexels

Social media giant Reddit has entered into an agreement with Google to provide its content for the training of the search engine titan's artificial intelligence models, Reuters reported. One of the sources disclosed that the contract with Google, an entity under Alphabet, is valued at approximately $60 million annually.

This collaboration highlights Reddit's strategic move to diversify its revenue streams amidst intense competition for advertising spending from platforms such as TikTok and Meta Platforms' Facebook, as the company gears up for a highly anticipated stock market debut.

The sources who reported to Reuters, who opted to remain anonymous as they were not authorised to speak to the media, declined further identification. Both Reddit and Google declined to offer comments on the matter. Bloomberg had previously reported on Reddit's content deal without specifying the buyer.

Last year, Reddit announced its intention to charge businesses for access to its application programming interface (API), the mechanism through which it disseminates content. The arrangement with Google marks Reddit's inaugural reported deal with a major AI corporation.

Based in San Francisco, Reddit has been contemplating an initial public offering (IPO) for over three years and is expected to file its IPO paperwork this week, unveiling its financial details to potential investors for the first time, as disclosed by two of the sources. 

The company, which garnered a valuation of approximately $10 billion in a funding round in 2021, is looking to offer around 10% of its shares in the IPO.

Reddit's forthcoming stock market debut would signify the first IPO of a major social media firm since Pinterest went public in 2019. 

In recent months, developers of AI models have been actively securing agreements with content owners to broaden their training datasets beyond extensive web scrapes. However, this practice raises concerns regarding potential copyright violations, with numerous content creators alleging unauthorised use of their content.

Established in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, Reddit is renowned for its diverse range of niche discussion communities, some boasting memberships in the tens of millions.