Agreements are strategically crucial to increase the company’s revenue.
Tldr
- The FTC is investigating Reddit’s AI licensing agreements.
- Reddit is preparing for its IPO.
- Reddit has reached an agreement of about $60 million with Google.
- The FTC is also looking into other AI-related companies.
Reddit under FTC Investigation
According to documents recently filed with the Securities and Exchange Commission, Reddit, a popular social media platform, is already under scrutiny by the Federal Trade Commission (FTC). The FTC is investigating the terms of the company’s AI-related licensing agreements.
Reddit’s Ambitious Plans despite the Investigation
In this slightly tense context, Reddit is nonetheless preparing for its initial public offering (IPO). The company stated, “the FTC has indicated that it ‘intends to request information and documents’ regarding our AI agreements.” Although the recent nature of these technologies and related business arrangements may be of interest to regulatory bodies, Reddit maintains that no unfair or deceptive business practices have been implemented on its part.
Significant Agreements for Reddit’s Business Model
Entering into agreements to use user-generated content is a major strategy for Reddit to boost its revenue ahead of its IPO. An example is the agreement with Google, which will use Reddit’s data to train its AI models. This agreement, valued at around $60 million, highlights Reddit’s pursuit of new collaborations of this kind.
FTC Focuses on Other Tech Giants
Reddit is not the only company under FTC scrutiny. According to Axios, other companies have also received similar letters from the regulator. In addition to Reddit, “the FTC is currently investigating Microsoft, Alphabet, and Amazon regarding their investments in prominent AI startups.” It appears that the current trend of generative AI and the relationships of these new players with major tech companies are drawing increased interest from the FTC.