Just days before its anticipated IPO, Reddit finds itself under the spotlight as the Federal Trade Commission (FTC) initiates an inquiry into the platform’s licensing of user data to artificial intelligence (AI) companies.
The inquiry, revealed by Reddit on Friday, comes hot on the heels of news that the FTC is seeking clarification from the platform, including a potential meeting and access to various documents and information, as part of the investigation, as noted by Axios.
Earlier reports in February unveiled Reddit’s licensing deal with Google, amounting to a substantial $60 million annually. This news was a boon for potential investors seeking signs of Reddit’s profitability.
Google, known for its pursuit of generative AI development, has faced its fair share of controversies, particularly surrounding its Gemini tool.
While Google’s involvement was initially undisclosed, the tech giant later confirmed an expanded partnership with Reddit, focusing on a Cloud collaboration facilitating the integration of new AI capabilities using Vertex AI.
This partnership grants Google access to Reddit’s Data API, streamlining access to Reddit content through Google products.
Reddit had started implementing fees for API usage last year, primarily in response to large language models scraping the platform for AI chatbot training. Consequently, this move led to the closure of several independent Reddit clients, including Apollo, unable to afford the access fees imposed by Reddit.
The FTC’s scrutiny into Reddit’s practices doesn’t necessarily signify a formal investigation. Additionally, Reddit isn’t the sole platform engaging with AI companies currently under the agency’s radar.
In Reddit’s statement regarding the inquiry, the platform expressed its belief that it has not partaken in any unfair or deceptive trade practices.
