Reddit Prepares for Initial Public Offering, Offering Decade of User Content for Sale
By Wes Davis, a tech and entertainment journalist with extensive experience in news and reviews.
In a recent development reported by Bloomberg, Reddit is gearing up to make a significant move by granting access to its user-generated content platform to an undisclosed major AI firm in a lucrative licensing agreement. The deal, estimated at approximately $60 million annually, is subject to potential adjustments as Reddit progresses towards its impending public debut.
Traditionally, AI companies have extracted data from the internet without explicit authorization, a practice that has raised legal concerns. In light of this, companies are now striving to establish more legitimate means of acquiring data. While the identity of the AI company partnering with Reddit remains undisclosed, the deal far surpasses the \(5 million annual offers made by OpenAI to news publishers for their data. Concurrently, tech giant Apple is in negotiations with leading news organizations for extended agreements valued at a minimum of \)50 million, as reported by The New York Times.
This development comes on the heels of a previous report in October indicating that Reddit had threatened to block search crawlers from Google and Bing unless agreements were reached with AI firms for training data. Although unconfirmed, sources mentioned in The Washington Post suggested that Reddit was prepared to withstand potential repercussions on its search visibility.
Reddit’s strategic maneuvers, including its firm stance during contentious situations, have been evident in past incidents. Notably, the platform navigated through a significant protest triggered by modifications to its third-party API access pricing, resulting in the closure of several prominent Reddit apps.
According to Bloomberg, Reddit’s revenue witnessed a 20% increase year-over-year by the conclusion of 2023. However, the company fell short of its \(1 billion revenue target set two years earlier by \)200 million. Advised to aim for a \(5 billion valuation upon its public offering slated for March, Reddit’s projected value represents a significant shift from its previous valuation range of \)10–$15 billion during its aborted IPO attempt in 2021 due to market conditions.
