Reddit has recently signed an Artificial Intelligence content licensing deal with Google to increase its revenue generation and market share, which is now under scrutiny by the US Federal Trade Commission (FTC). This inquiry from FTC came after the company talked about its first Initial Public Offering (IPO), expected to close at a $6.5 billion value scheduled to happen next week. In response, Reddit disclosed the filing letter to the Securities and Exchange Commission against the FTC, claiming them to be undaunted.
In the letter, Reddit wrote, “Given the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC has expressed interest in this area. We do not believe we have engaged in any unfair or deceptive trade practice.”
Must Read: Reddit Signs $60 Million AI Content Licensing Deal with Google
Why Reddit receives FTC inquiry on AI-related deals ahead of IPO
- FTC Inquiry: Reddit is under investigation by the FTC regarding the use of user data for AI training
- Business Deals: Reddit has made a $60 million deal with Google to access databases for AI model training
- IPO Plans: Reddit is preparing for an IPO, aiming for a valuation of up to $6.4 billion.
- Company Statement: Reddit denies any unfair or deceptive trade practices in its SEC filing.
The company disclosed the inquiry Friday in a filing with the Securities and Exchange Commission that cited a letter from the FTC dated Thursday. To read here, Reddit disclosed inquiry: Click Here
Also Read: G7 Consensus on Advancing AI for Sustainable Development
On Reddit, most of the revenue generation relies on online advertising, but they are looking to increase revenue generation in other ways, like artificial intelligence content licensing. Partner was its first deal with Google, where they would use Reddit’s human-generated data to train AI models. This deal was offered at $60 million per year. Reddit claims that they are in a very early stage of ‘content licensing’ and want to grow in this field with an expected revenue generation of around $66.4 million in the year 2024.
As Reddit was gearing up for its much-anticipated stock market debut, intending to diversify its revenue along with strong competition from platforms like Meta’s Facebook, Tiktok’s inquiry from FTC will surely affect its revenue system and stocks. It might cost them some money or compensation to settle the matter.
Also Read: Why Apple Has Acquired DarwinAI
Even though Reddit did not comment anything except for this disclosure, these deals by big tech giants like Reddit and Google, wherein they share user data for training Artificial Intelligence models, remain a matter of concern for billions of members. The outcome of the FTC investigations and Reddit’s debut on the stock market (IPO) will be closely watched by investors and tech giant competitors.
