Reddit, which is preparing for its IPO, reportedly told prospective investors about the contract earlier this month
Reddit $RDDT announced Thursday (Feb. 22) it is partnering with Google $GOOGL to let the search engine train its AI models with its user-generated content. The partnership is reportedly a $60 million-per-year deal, Reuters reported Thursday (Feb. 21) — a move that could give Reddit a financial boost as it prepares to go public.
The social news aggregation platform and online forum — which is reportedly readying for its stock market launch in March — had told prospective investors it signed the agreement with a “large AI company” earlier this year, but did not disclose who the deal was with, Bloomberg reported. The deal also arises amid concerns around how AI companies will use and profit from user-generated content; although platforms can ink eight-figure deals with artificial intelligence developers, the users who created that content don’t receive any of the profits. Neither Reddit nor Google provided comment on the reported deal to Quartz before publication.
Last April, Reddit said it would start changing companies that use its data to train AI without returning “any of that value.” Reddit CEO Steve Huffman said the unauthorized use of the platform’s content is “something we have a problem with.” Reddit announced changes to its API, putting its data behind a paywall, and said “third parties who require additional capabilities, higher usage limits, and broader usage rights,” will have to abide by the changes. The website’s volunteer moderators protested the move at the time, saying the decision would target smaller developers whose tools they use to monitor Reddit communities.
Reddit reportedly made more than $800 million in revenue last year, which is a 20% increase from its revenue in 2022. It was also reportedly advised to seek a valuation of at least $5 billion in its IPO. In September 2021, Reuters reported Reddit was seeking investment bankers and lawyers to advise the company for an IPO.
The platform’s deal with Google is the latest in a series of data licensing deals between AI companies seeking content to train AI models with published content, and those content providers. In December, ChatGPT maker OpenAI struck a deal with German publisher Axel Springer SE for tens of millions of euros to use news articles from its sites, including Politico and Business Insider, to train its AI models. OpenAI also reached an agreement with the Associated Press to use its news archive in July.
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