FTC launches inquiry into Reddit AI training deals as platform prepares to go public

Reddit says it has entered into licensing arrangements with AI companies worth $203m | FTC wants to ‘learn more’ about plans related to selling content for AI training | Platform reportedly signed deal with Google and others.

The Federal Trade Commission (FTC) is conducting an inquiry into the sale, licensing or sharing of Reddit content to train AI models, as the social media platform prepares for its stock market debut this week.

Reddit said in a statement published on Friday (March 15) that it was “not surprised” by the FTC’s interest given the novel nature of the technologies and commercial arrangements concerned, and did not believe that it had engaged in any unfair or deceptive trade practice.

Last year, the FTC told the US Copyright Office that it was interested in questions surrounding copyright, including fair use, and AI-generated content.

The commission said a copyright violation that deceives consumers, exploits a creator’s reputation or diminishes the value of her existing or future works could face FTC sanctions.

Google deal reportedly worth $60m

In February it was reported that Reddit had entered into a licensing agreement with Google worth around $60 million a year, under which its user-generated content would be available to train the social media giant’s AI models.

Google said in a statement on February 22 that it had deepened its partnership with Reddit with access to Reddit’s Data API, which “will help us better understand Reddit content and display, train on, and otherwise use it in the most accurate and relevant ways”.

Reddit said that in January of this year it had entered into “certain licensing arrangements” worth $203 million over the next few years.

It is unclear whether these deals included OpenAI, but its CEO Sam Altman has a significant interest in Reddit and is its third-largest shareholder, according to an initial public offering (IPO) prospectus filed with the US Securities and Exchange Commission.

Altman has a reported 8.7% stake in the social media platform, although some of the shares are held by funds associated with him.

In the IPO filing, Reddit stated its intentions to profit from its data via licences for AI training, saying that its “vast and unmatched archive of real, timely, and relevant human conversation on literally any topic” was an invaluable dataset for a variety of purposes, including AI training.

“We expect our data advantage and intellectual property to continue to be a key element in the training of future LLMs [large language models],” Reddit said.

With the licensing activity having drawn attention from the FTC, Reddit said it had received a letter stating that the FTC was interested in “meeting with us to learn more about our plans” and intended to request information and documents as the inquiry continued.

IPO ‘oversubscribed’

Reddit has amassed over 1 billion posts and says it has around 73 million unique users on its site a day.

However, it has been losing money since its launch in 2005 and is seeking to raise as much as $6.4 million from its IPO.

Reuters reported yesterday (March 17) that the company’s IPO was between four and five times oversubscribed, with sources saying it was poised to reach its target share price range of $31 to $34.