Social media giant Reddit is experiencing a major upheaval before its public offering. An investigation launched by the Federal Trade Commission (FTC) is scrutinizing the company’s data licensing practices for artificial intelligence training. This development emerged during preparations for Reddit’s long-awaited public offering and has caused a serious stir in the markets.
Reddit Issues a Statement
In a revised S-1 registration statement submitted to the Securities and Exchange Commission yesterday regarding the FTC investigation, Reddit’s statement increased concerns about the company’s future.
According to Reddit, it received a letter on March 14, 2024, indicating that the FTC is investigating the sale, licensing, or sharing of user-generated content to third parties. Such an investigation raises serious concerns about Reddit’s practice of using a vast data pool to train artificial intelligence models.
Uncertainties Surrounding the Company’s Future
Although the company claims it has not engaged in any unfair or deceptive trade practices, it is clear that such scrutiny could damage Reddit’s reputation and its plans for a public offering. Particularly in the shadow of a recent deal with Google, it is believed that Reddit is increasingly engaged in data trading, as evidenced by its $60 million annual agreement.
This deal means Reddit is providing search giant Google with access to a vast data pool to train artificial intelligence models. This translates to Google gaining access to Reddit’s valuable data in exchange for increased visibility on the platform. However, the ethical and commercial aspects of this data exchange are attracting the attention of regulators and investors, creating uncertainty about the company’s future.
Artificial Intelligence and Reddit: A Data Sharing Wind Blows, Leaving Traces
Reddit made a bombshell announcement on Thursday, revealing a new partnership with technology giant Google. This agreement appears to be a significant milestone in Reddit’s nearly twenty-year history. So, what was this exciting development?
Reddit has signed an agreement granting Google access to user-generated content. This deal will facilitate Google’s exploration and access to communities and conversations on Reddit. Notably, with over 100,000 active communities and an average of 1.2 million posts and 7.5 million comments per day, Reddit offers a particularly rich data pool for Google.
Immediate Access Granted
Through this partnership, Google will have more immediate and structured access to Reddit data. This means that Google will now better understand Reddit content and more effectively help users access the information they are searching for.
However, this exciting development also brings some concerns. The licensing of user data for artificial intelligence is causing worries among privacy advocates and regulators. Reddit acknowledges the sensitivity of this issue and states that its data licensing efforts are still in the early stages and subject to evolving regulations.
Reddit’s Artificial Intelligence Goals
This development brings Reddit’s artificial intelligence goals back into the spotlight. As part of its public offering plans, the company has attracted attention by investing in Bitcoin and Ethereum. It is also known that Reddit has purchased Ethereum and Polygon (MATIC) for virtual products on its platform.
These steps also demonstrate Reddit’s desire to focus on artificial intelligence and the cryptocurrency world. Referring to forecasts by the International Data Corporation, the company predicts that the artificial intelligence market will reach $1 trillion by 2027 with an annual growth rate of 20%. However, Reddit’s moves towards these technologies are also facing regulatory challenges.
The Federal Trade Commission’s (FTC) investigation into Reddit underscores the regulatory hurdles standing in the way of the company’s efforts to benefit from the artificial intelligence boom. While Reddit assures that it has not violated any laws, it acknowledges that the investigation could be lengthy and unpredictable.
