Even if you don’t frequent Reddit, there’s a good chance you’ve usedeveryone’s favorite Google trick, where you type something you’re looking for into a search engine, and then just add the word “reddit” afterward to find threads full of valuable information like reviews and other user comments. With AI chatbots likeGoogle Geminiand ChatGPT doing their best to answer questions directly instead of only listing links, Reddit comments have become a hot commodity in recent months, and the company famously monetized its API last year as a result, effectively killing offthird-party Reddit clients. Now, it appears we’re seeing the next phase in this plan.
Reddit’s API drama explained: The path to profitability takes its toll
Reddit’s changes have effectively killed third-party apps
Bloomberg reportsthat Reddit has signed a deal to allow an “unnamed large AI company” to train its models on content from the website. The deal is reportedly worth $60 million annually, and the details became known after Reddit shared the information with would-be investors ahead of its anticipated initial public offering. Reddit’s IPO is expected soon, with some insiders thinking the company could go public as early as next month.
Generative AI chatbots have matured by leaps and bounds since ChatGPT’s public debut in late 2022, with companies keen on training their offerings with the type of information found in a Reddit comments section — opinions, reviews, and first-hand accounts. Reddit had previously offered access to this data through a free API, but in 2023, implemented a new premium API system that effectively killed third-party Reddit apps and tools by charging for access to this information. In an interview withThe New York Times, Reddit CEO Steve Huffman, known as /u/spez on the platform, cited the growing interest in this data as a motivation for the change.
The Reddit corpus of data is really valuable, but we don’t need to give all of that value to some of the largest companies in the world for free.
- Reddit CEO Steve Huffman
Reddit successfully monetizing this user data ahead of its IPO is good news for the company and potential investors, but is unlikely to sit well Redditors — after all, it’s their efforts, their comments and submissions, that are being used as a vehicle for profit by both Reddit and the unnamed AI company.
