Reddit strikes $60 million deal with Google for AI training, ahead of IPO

Reddit has reached a deal with Google to provide its content for the search engine giant’s AI models. The contract is reported to be worth about $60 million per year, and the deal indicates Reddit’s attempt to generate additional revenue ahead of its upcoming stock market launch, as it faces tough competition from platforms like TikTok and Facebook.

Social media platform Reddit has secured a deal with Google, allowing the search engine giant to use its content for training AI models. The contract, valued at approximately $60 million annually, signifies Reddit’s effort to generate additional revenue as it gears up for a high-profile stock market launch. This move comes amid fierce competition for advertising dollars from platforms like TikTok and Meta’s Facebook.

Last year, Reddit announced plans to charge companies for access to its application programming interface (API), the mechanism through which it distributes its content—the agreement with Google marks Reddit’s first reported collaboration with a major AI company. Based in San Francisco, Reddit has been contemplating a stock float for over three years and is set to file its initial public offering (IPO). According to sources, this filing will reveal financial details to potential IPO investors.

Valued at about $10 billion in a 2021 funding round, Reddit aims to sell around 10% of its shares in the offering. If successful, Reddit’s stock market launch would be the first IPO of a major social media company since Pinterest in 2019. The practice raises copyright concerns as AI model developers actively secure content partnerships to diversify training data beyond internet scrapes since many content creators have alleged unauthorised use of their data in such initiatives.