Reddit, which is expected to IPO in April, hosts more than 100,000 active communities and entertains 73 million daily active unique visitors.
Federal regulators are probing Reddit’s deals to license its users’ data to AI companies, the social media company said, an inquiry that comes just days before Reddit is expected to go public.
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Reddit announced in February that it is partnering with Google to let the search engine train its AI models using Reddit’s user-generated content. The partnership is reportedly worth $60 million per year.
Now the Federal Trade Commission wants to know more. Reddit disclosed Friday that it received a letter from the FTC the day before. Reddit said that the agency told the company it is “conducting a non-public inquiry focused on our sale, licensing, or sharing of user-generated content with third parties to train AI models.”
Reddit said last year that it would start changing companies that use its data to train AI without returning “any of that value.” Reddit CEO Steve Huffman said the unauthorized use of the platform’s content is “something we have a problem with.” Reddit announced changes to its API, putting its data behind a paywall, and said “third parties who require additional capabilities, higher usage limits, and broader usage rights” will have to abide by the changes. Reddit’s volunteer moderators protested the move at the time, saying the decision would target smaller developers whose tools they use to monitor Reddit communities.
The irreverent social media platform, home to tens of thousands of forums, plans to raise up to $748 million in an initial public offering that has been years in the making. Reddit first filed to go public through a confidential public offering prospectus in late 2021, when it had been valued at about $10 billion. Under the terms disclosed in a March 11 filing with U.S. federal regulators, the company could now be valued at nearly $6.5 billion.
Reddit will debut on the New York Stock Exchange and trade under the ticker symbol “RDDT.” It’s expected that Reddit will IPO sometime this month or as soon as next week.
When it does land on the stock market, it will do so as the first major U.S. social media company to go public in years. Pinterest was the last platform to attempt an IPO, launching on the NYSE in 2019 with a $12.7 billion valuation.
-Will Gavin and Britney Nguyen contributed to this article.
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{URL}https://qz.com/reddit-ai-user-data-ftc-ipo-going-public-1851341870{/URL}
{Author}Quartz Staff{/Author}
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