Reddit's shares dropped significantly after the Wall Street Journal revealed that the company is contemplating cutting off Google's access to its content for artificial intelligence training. This decision comes as Reddit reassesses the value of a deal made in 2024, which allowed Google to utilize Reddit's content for AI model training.
The concern stems from a noticeable decline in website traffic attributed to Google's AI-generated summaries, which has also affected other media outlets. Reddit's current $60 million annual agreement with Google is nearing its end, and discussions about renewal are ongoing.
The company has previously benefited from similar partnerships, including one with OpenAI, which contributed to a strong earnings report last quarter, where Reddit exceeded revenue expectations with a 69% year-over-year increase. CEO Steve Huffman emphasized the importance of these partnerships during the earnings call.
As Reddit prepares to announce its second-quarter earnings on July 30, the market is closely watching how these developments may impact its financial outlook and stock performance