It seems that Reddit has found itself in the spotlight once again, this time with the U.S. Federal Trade Commission (FTC) conducting an inquiry regarding the company’s handling of user-generated content. Specifically, the FTC is interested in Reddit’s sale, licensing, and sharing of this content with third parties for the purpose of training artificial intelligence (AI) models.
In response to the inquiry, Reddit stated that it is not surprised by the FTC’s interest, given the unique nature of these technologies and commercial arrangements. The company maintains that it has not engaged in any unfair or deceptive trade practices. Reddit received the letter from the FTC on March 14, shedding light on the investigation.
Interestingly, just last month, Reuters reported that Reddit had struck a deal with Google, a subsidiary of Alphabet Inc., allowing the social media platform to provide its content for training Google’s own AI models. The contract, valued at around $60 million per year, showcases Reddit’s efforts to generate new revenue streams in a highly competitive market. With the rise of platforms like TikTok and Meta Platform’s Facebook, advertising dollars are becoming increasingly coveted, and Reddit is no exception to this trend.
This development comes at a significant time for Reddit, as the platform recently announced its intention to go public in the United States. In an initial public offering (IPO) that is garnering considerable attention, Reddit is aiming for a valuation of up to $6.4 billion. This move signals the company’s ambition to solidify its position in the stock market and capitalise on its loyal user base.
While the outcome of the FTC inquiry remains to be seen, it is clear that Reddit’s involvement in the sale and licensing of user-generated content for AI training purposes has piqued the interest of regulatory bodies. As technology continues to advance and the lines between privacy and innovation blur, it is not surprising that federal agencies are keeping a close eye on companies like Reddit. The impact of this inquiry on the future of Reddit’s business practices and its pursuit of revenue streams is yet to be determined.
In the words of Reddit, “Given the novel nature of these technologies and commercial arrangements, we are not surprised that the FTC has expressed interest in this area. We do not believe that we have engaged in any unfair or deceptive trade practice.” Only time will tell how the investigation unfolds and whether any changes or repercussions will befall the popular social media platform.
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