Reddit reportedly strikes $60M-a-year AI content-licensing deal with Google

Reddit inked a licensing deal with Google that will hand over the popular social media site’s content to train the tech behemoth’s artificial intelligence models, sources familiar with the agreement revealed.

The contract with Alphabet-owned Google is worth about $60 million per year, according to one of 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 filed its long-awaited initial public offering — is seeking to generate new revenue amid fierce competition for advertising dollars from the likes of TikTok and Facebook-parent Meta.

When The Post sought comment from Reddit and Google, spokespeople for each company pointed to blog posts on their repective websites.

Reddit insisted in its post that the platform’s “work with Google will make it easier for people to find, discover and engage in content and communities on Reddit that are most relevant to them.”

Google, meanwhile, specified that Reddit will integrate AI into using its Vertex AI tool.

Bloomberg previously reported Reddit’s content deal without naming the buyer, 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 serve as a model for future contracts of a similar nature.

The agreement with Google is Reddit’s first reported deal with a big AI company.

It comes less than a year 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 example, by personalizing their display theme or changing how they upvote a post — and ensure that their data is not collected and shared.

Instead of Reddit footing the bill to operate APIs, the API itself now has to pay the costs — a move CEO Steve Huffman told The New York Times at the time said was made so Reddit doesn’t continue giving away all its “valuable” data for free.

The move upset some users who rely on third-party apps to access Reddit, and nearly 8,000 subreddit forms went dark for 48 hours in protest of the new pricing policy.

Moderators — who work as unpaid volunteers for Reddit, doing tasks such as setting community rules and enduring threads remain on topic — said at the time that they wanted Reddit admins to realize how much they rely on “mods” to run the site, and will catch their attention by harming the site’s traffic.

Reddit still raked in more than $800 million in revenue in 2023 — a 20% year-over-year increase, people familiar with the company’s financials told Bloomberg.

The company primarily generates its revenue through advertising.

In April, Reddit rolled out a $5.99-per-month subscription price for users to access premium content, though the initiative has yet to turn a profit, Huffman revealed in a Reddit post.

The move to profit from AI will help Reddit tap into investors’ enthusiasm for the technology, thus boosting its IPO, Bloomberg reported.

Reddit has reportedly been mulling a stock float for more than three years, but has held back from pulling the IPO trigger in the past until it came closer to profitability.

Bouts of market volatility that shut down the IPO market for much of the last two years also contributed to it delaying its plans.

The company — co-founded in 2005 by prolific investor Alexis Ohanian and his college roommate at the University of Virginia, web developer Steve Huffman — was valued at about $10 billion in a funding round in 2021.

Reddit’s stock market launch would mark the first IPO of a major social media company since Pinterest floated its shares in 2019.

Reddit routed roughly 850 million monthly active users in 2023 — surpassing Pinterest, Snapchat and LinkedIn, according to Business of Apps.

It has also become popular for fueling dozens of “meme stock” rallies.

Perhaps the most infamous so-called meme stock was GameStop — the subject 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 among the most widely-shorted US companies.

AMC Entertainment shares also soared on a meme stock rally boosted by the same forum on Reddit, where users shared countless posts cheering the movie theater chain when its stock finished up more than 100% in mid-2021.

With Post wires