Reddit strikes a $60 million AI content licensing deal with Google

In an exclusive report last night, Reuters revealed that Reddit has entered into a deal with Google to provide its content for training the search engine giant’s artificial intelligence models. Three individuals familiar with the matter disclosed this information. Bloomberg had previously reported on Reddit’s content deal without disclosing the buyer.

According to one of the sources, the contract with Google, an Alphabet-owned company, is valued at approximately $60 million per year. This deal highlights Reddit’s efforts to generate additional revenue as it gears up for a highly anticipated stock market launch. The platform faces tough competition for advertising dollars from platforms such as TikTok and Meta Platform’s Facebook.

The sources, who were not authorized to speak to the media and chose to remain anonymous, stated that both Reddit and Google declined to provide comments on the matter, Reuters reported.

Last year, Reddit announced its intention to charge companies for access to its application programming interface (API), the method through which it distributes its content. The agreement with Google marks Reddit’s first reported deal with a major AI company.

Reddit, headquartered in San Francisco and contemplating a stock float for over three years, is preparing to file its initial public offering (IPO) this week. This filing will reveal its financial details for the first time to potential IPO investors and may be available as early as Thursday, according to two of the sources.

In a bid to sell about 10% of its shares in the offering, Reddit, valued at around $10 billion in a 2021 funding round, is seeking to make a significant mark on the stock market. If successful, Reddit’s stock market launch would be the first IPO of a major social media company since Pinterest went public in 2019.

Recently, creators of AI models have been actively securing deals with content owners to diversify their training data beyond extensive internet scrapes. However, this practice raises potential copyright concerns, as many content creators have alleged unauthorized use of their content.

The news of Reditt’s AI content licensing deal comes less than a year after the social aggregation site laid off 90 employees, or about 5% of its workforce. Reddit CEO Steve Huffman also stated at the time that the company would scale down its hiring plans to about 100 individuals, down from the initial target of 300.

Reddit has been growing exponentially since its inception 16 years ago. Today, Reddit has almost 2 billion in monthly traffic. The social news aggregation site has grown to become one of the 25 most-visited websites in the world and the 7th most-visited website in the U.S., according to Alexa Internet data as of February 2021.

Founded in 2005 by Alexis Ohanian, Reddit is a social news aggregation, web content rating, and discussion platform. As of October 2020, Reddit ranks as the 17th-most-visited website in the world and the 7th most-visited website in the US, according to Alexa Internet.