Reddit inked a licensing deal with Google that can hand over the favored social media site’s content to coach the tech behemoth’s artificial intelligence models, sources familiar with the agreement revealed.
The contract with Alphabet-owned Google is price about $60 million per yr, in line with one in all the sources.
The length of the deal and what content the San Francisco-based company will provide was not disclosed.
The deal underscores how Reddit — which is preparing for its long-awaited initial public offering — is in search of to generate latest revenue amid fierce competition for promoting dollars from the likes of TikTok and Facebook-parent Meta.
Representatives for Reddit and Google didn’t immediately reply to the Post’s request for comment.
Bloomberg previously reported Reddit’s content deal without naming the customer, noting that the San Francisco-based networking platform told prospective buyers in its yet-to-be-filed IPO that it had signed the deal.
An unnamed source told Bloomberg that the agreement could function a model for future contracts of an analogous nature.
The agreement with Google is Reddit’s first reported deal with an enormous AI company.
It comes lower than a yr after Reddit implemented a paid model for its third-party apps, or application programming interfaces (APIs), that allow monthly users to customize their Reddit experience — for instance, by personalizing their display theme or changing how they upvote a post — and make sure that their data will not be collected and shared.
As an alternative of Reddit footing the bill to operate APIs, the API itself now has to pay the prices — a move CEO Steve Huffman told The Recent York Times on the time said was made so Reddit doesn’t proceed making a gift of all its “beneficial” data at no cost.
The move upset some users who depend on third-party apps to access Reddit, and nearly 8,000 subreddit forms went dark for 48 hours in protest of the brand new pricing policy.
Moderators — who work as unpaid volunteers for Reddit, doing tasks reminiscent of setting community rules and enduring threads remain on topic — said on the time that they wanted Reddit admins to understand how much they depend on “mods” to run the positioning, and can catch their attention by harming the positioning’s traffic.
Reddit still raked in greater than $800 million in revenue in 2023 — a 20% year-over-year increase, people familiar with the corporate’s financials told Bloomberg.
The corporate primarily generates its revenue through promoting.
In April, Reddit rolled out a $5.99-per-month subscription price for users to access premium content, though the initiative has yet to show a profit, Huffman revealed in a Reddit post.
The move to take advantage of AI will help Reddit tap into investors’ enthusiasm for the technology, thus boosting its IPO, Bloomberg reported.
Bouts of market volatility that shut down the IPO marketplace for much of the last two years also contributed to it delaying its plans.
Nonetheless, Reddit is anticipated to make its high-profile IPO filing this week, which might detail its financials for the primary time to potential investors upon its debut.
The filing might be available as early as Thursday, two of the sources said.
The corporate — co-founded in 2005 by prolific investor Alexis Ohanian and his college roommate on the University of Virginia, web developer Steve Huffman — was valued at about $10 billion in a funding round in 2021.
It’s in search of to sell about 10% of its shares within the offering, Reuters has previously reported.
Reddit’s stock market launch would mark the primary IPO of a serious social media company since Pinterest floated its shares in 2019.
Reddit routed roughly 850 million monthly energetic users in 2023 — surpassing Pinterest, Snapchat and LinkedIn, in line with Business of Apps.
It has also turn out to be popular for fueling dozens of “meme stock” rallies.
Perhaps probably the most infamous so-called meme stock was GameStop — the topic of the recently-released “Dumb Money” film, which detailed how the rumors of the video-game retailer on Reddit’s r/WallStreetBets discussion thread helped make the video-game retailer amongst probably the most widely-shorted US corporations.
AMC Entertainment shares also soared on a meme stock rally boosted by the identical forum on Reddit, where users shared countless posts cheering the movie show chain when its stock finished up greater than 100% in mid-2021.
With Post wires