Reddit stock sinks on report it may not renew Google AI content deal
Reddit is considering ending its data-licensing partnership with Google due to concerns that AI-generated search summaries are reducing traffic to its platform. The company is currently in negotiations to determine if the deal remains beneficial for its business model.
Why it matters
This highlights the growing tension between content publishers and AI companies over the value of training data versus the loss of referral traffic.
Shares of Reddit slid 8% on Wednesday after the Wall Street Journal reported the company has discussed shutting off Google's access to its content for artificial intelligence use.
Reddit stock is down roughly 25% year-to-date.
The two companies struck a deal in 2024 to allow the search giant to train its AI models on Reddit's content. But as Google's AI summaries reduced traffic to websites from the search results page, Reddit is reconsidering the benefits of the deal, according to the Journal, citing people familiar with the matter.
According to the report, the $60 million-a-year deal is ending soon, and the companies are in talks about potentially renewing the partnership.
A Reddit spokesperson told CNBC in a statement that the company is approaching negotiations "just like any business should, by focusing on doing what's best for Reddit."
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