Reddit strikes $60 million AI content licensing deal with Google
Reddit, the popular social media platform, has inked a $60 million per year content licensing deal with tech giant Google, according to Reuters. This groundbreaking agreement allows Google to utilize Reddit's content for training its artificial intelligence models. Reddit has also received a new revenue source as it faces stiff competition from rivals like TikTok and Meta's Facebook. The news comes as Reddit gears up for a high-profile stock market debut.
Reddit's API access and upcoming IPO
Last year, Reddit revealed plans to charge firms for access to its application programming interface (API), which distributes its content. The Google partnership is the first of its kind since that announcement. Additionally, Reddit, valued at around $10 billion in 2021, is expected to file for its initial public offering (IPO) this week. The company aims to sell roughly 10% of its stocks in the offering.
AI companies seeking diverse training data
AI model developers have been seeking deals with content owners for diversification of their training data and to avoid potential copyright issues. Reddit, co-founded by Steve Huffman and Alexis Ohanian in 2005, boasts numerous niche discussion groups with millions of members. The platform's stock market launch would be the first major social media IPO since Pinterest went public in 2019.
A look at Reddit's financials
By the end of 2023, Reddit's YoY revenue was up by 20%. However, it still fell $200 million short of the $1 billion target, it had set two years prior. The firm has been advised to seek a $5 billion valuation when it opens for IPO this month. To note, this will be almost half of the $10-15 billion it could have achieved, had it gone public in 2021. At that time, it was held back by a market downturn.
