Reddit has been focusing on data licensing agreements as a key part of its growth strategy. The company has licensing agreements with customers including Google, worth over $200 million. Reddit's platform, with over 1 billion posts and more than 16 billion comments, is a valuable resource for generative AI companies. However, Reddit could face backlash from users concerned about the monetization of their data. This follows a similar situation with Stack Overflow, which faced user protests after agreeing to supply data to OpenAI for model training.
Key takeaways:
- OpenAI has struck a deal with Reddit to use the social news site’s data for training AI models, with Reddit content being incorporated into ChatGPT, OpenAI’s conversational AI.
- OpenAI's CEO, Sam Altman, has an 8.7% stake in Reddit, making him the third-largest shareholder, and was once a member of the company’s board of directors. The partnership was led by OpenAI’s COO and approved by OpenAI’s independent board of directors.
- Reddit has made data licensing agreements a key part of its growth strategy, with agreements to license its data to customers including Google worth over $200 million. Reddit's stock was up 11% following the announcement of the OpenAI deal.
- There could be potential backlash from Reddit users concerned about how their data is being monetized, as seen with Stack Overflow's agreement with OpenAI, which led to some users deleting their top-rated answers in protest.