Reddit Faces FTC Inquiry Over User-Generated Content Sharing

Reddit has disclosed that the U.S. Federal Trade Commission (FTC) is conducting an inquiry focused on the company’s practices related to the sale, licensing, and sharing of user-generated content with third parties for the purpose of training artificial intelligence (AI) models.

Reddit has revealed that the United States Federal Trade Commission (FTC) is investigating the firm.

Reddit’s Response:

In response to the FTC inquiry, Reddit stated that it is not surprised by the interest expressed by the FTC in this area, given the novel nature of the technologies and commercial arrangements involved. The company asserts that it does not believe it has engaged in any unfair or deceptive trade practices.

According to Reddit, the company received the letter from the FTC regarding the inquiry on March 14, indicating the official commencement of the investigation process.

Partnership with Google:

In February, Reuters reported that Reddit had entered into a deal with Alphabet’s Google, allowing Google to access Reddit’s content for training its AI models. The contract, valued at approximately $60 million per year, underscores Reddit’s efforts to diversify revenue streams amid intense competition in the advertising market.

Revenue Generation Strategy:

Reddit’s partnership with Google reflects its strategic approach to monetizing its platform, particularly in light of competition from popular social media platforms like TikTok and Meta Platform’s Facebook, which vie for advertising dollars.

Earlier this week, Reddit announced its plans for an initial public offering (IPO) in the United States, aiming for a valuation of up to $6.4 billion. The IPO represents one of the most anticipated stock market debuts in recent years, highlighting Reddit’s growth trajectory and market potential.