Reddit announces IPO plans, strikes $60 billion deal with Google for AI training using its posts

As part of the agreement, Reddit gains access to Google AI models to enhance its internal site search and other features, it added.

Reddit did not respond to queries.

In a separate statement, the San Francisco-based company announced plans for its initial public offering (IPO). The company aims to list its shares on the New York Stock Exchange under the ticker symbol RDDT.

It also reported a net income of $18.5 million in the October-December quarter on February 21, marking its first profit in two years. Reddit’s revenue for the same period stood at $249.8 million. These numbers were reported in a filing with the US SEC.

IPO Plans Reveal Reddit’s Connection with OpenAI’s Sam Altman

The CEO of OpenAI, Sam Altman, has emerged as a significant shareholder in Reddit, as per the regulatory filing detailing its intentions for an initial public offering, Bloomberg reported.

Entities connected to Altman hold 8.7 percent of Reddit’s outstanding shares, as revealed in the S-1 filing published on February 22. This stake comprises 789,456 Class A shares and 11.4 million Class B shares, the Bloomberg report said.

Notably, Advance Magazine Publishers Inc., affiliated with the Newhouse family publishing empire, holds the majority of Reddit’s shares, with approximately a third of the voting power.

Altman maintains longstanding connections with the San Francisco-based social media firm, having been part of the inaugural class at the Y Combinator accelerator in 2005 alongside Reddit co-founders Steve Huffman and Alexis Ohanian. Additionally, Altman briefly served as the company’s interim CEO for eight days following the resignation of former CEO Yishan Wong.

Google Collaboration: A Milestone for Reddit

This deal is a significant step for Reddit, a platform known for its decentralised discussions managed by volunteer moderators. These moderators have in the past protested against company decisions, including a blackout of parts of the site when Reddit planned to charge third-party apps for content access.

Further, unlike other social media platforms, Reddit does not employ algorithmic processes to predict user interests; instead, users actively search for their preferred discussion forums, a source told AP.

The source added that this agreement ensures Google adheres to Reddit’s user terms and privacy policy. Notably, Reddit’s approach to user content deletion differs from other social media platforms. When Reddit users delete their posts, the removal is comprehensive, leaving no lingering remnants. This practice extends to Reddit partners like Google, requiring them to respect users’ choices made on the platform.

Data Sharing: A Win-Win for Google

For Google, the data-sharing arrangement holds immense significance, providing access to human-generated content for training its AI models understanding of the world for improved conversational responses.

In a news release, Google praised Reddit as a repository of authentic human conversations and experiences, emphasizing its commitment to facilitating easier access to valuable information. 

While downplaying its focus on AI training, Google stressed its goal of streamlining user access to Reddit content, including product recommendations and travel advice, through Google products. The company termed this approach as “more content-forward displays of Reddit information,” with the dual purpose of benefiting Google’s tools and enhancing user engagement on Reddit.

(With inputs from AP and Bloomberg)

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Published: 23 Feb 2024, 06:28 AM IST