By: Nick Gambino
A new Bloomberg report is shining light on Reddit’s use of AI going forward. According to the outlet, Reddit has made a deal with an unknown AI company that would see them feed the platform’s content into AI models for training purposes.
This would presumably include all user-generated posts which is pretty much everything on the site. Reddit currently boasts 70 million daily active users. The move is a key one ahead of Reddit’s planned IPO and is worth $60 million a year.
Here’s why they are most likely making the move now. First, AI is a bigger deal than ever thanks to the popularity of ChatGPT. All the major tech companies from Google to Meta are incorporating some version of AI into their respective platforms. Reddit can’t be left in the dust. They would be smart to train their own version of AI to interact with users and predict the ways in which they engage with subreddits.
Second, Reddit is currently claiming a valuation of $5 billion even though they made just $800 million in 2023. That means they are looking at the value of their biggest asset – data. The information contained in subreddits (all of it user-generated, mind you) is worth a heck of a lot and the company knows it. They haven’t yet properly leveraged that asset.
“The Reddit corpus of data is valuable,” Steve Huffman, Reddit CEO, told The New York Times. “But we don’t need to give all of that value to some of the largest companies in the world for free.
Huffman was referring to the company’s controversial decision to start charging for Reddit’s API. A ton of moderators of some of the biggest subreddits staged blackouts last year in protest. All of these moves are bold ones meant to confidently bring Reddit public and prove that their $5 billion valuation is not just pie in the sky.
“Reddit is at a watershed moment where they need to make confident strides forward to show they can hang with the big social media dogs,” Andrew Tropeano, a technology expert with NWT Media (www.nwtmediagroup.com), said of Reddit’s embrace of AI. “This is their time to prove they aren’t just another tech sinkhole.”
