- Reddit has struck a deal worth $60 million with Google, allowing Google to use Reddit posts for training AI models and enhancing services, while Reddit gains access to Google’s AI for improving internal functions.
- It comes as Reddit announced plans for its IPO, aiming to list on the New York Stock Exchange, with its first profit in two years highlighted in its IPO filing.
- Despite Reddit’s unique approach to user engagement and content recommendation, the collaboration with Google signifies a potential shift towards data monetisation, enhancing Reddit’s valuation prospects for its IPO.
Reddit has announced a deal worth approximately $60 million with Google, where Reddit will allow Google to use posts from Reddit to train AI models and enhance services such as Google Search.
The partnership comes as its plans for an initial public offering (IPO) were released, aiming to list on the New York Stock Exchange. In its IPO filing submitted to the US Securities and Exchange Commission, Reddit pointed out that it achieved a net profit of $18.5 million in the fourth quarter of last year, marking the company’s first profit in two years.
Also read: Reddit to discontinue blockchain-based community points reward program
Reddit will also have access to Google’s AI models
The new deal gives Reddit access to Google’s AI models to improve its internal site search and other functionalities. This is undoubtedly a significant advancement for Reddit, whose core business relies on volunteer moderators to manage discussions on various topics, and joining forces with Google seems to enhance its profitability outlook.
While Reddit is also a social platform, unlike mainstream products like TikTok, Facebook, and YouTube, it doesn’t use big data for user profiling and content recommendation, instead allowing users to create and engage in discussions by searching for their desired topics. According to insiders, the collaboration with Google won’t disrupt Reddit’s existing operational model or incorporate algorithms into user targeting. Additionally, Google must comply with Reddit’s user agreement, meaning both Reddit and Google can’t retain relevant content when a post owner chooses to delete or take other actions.
Reddit aims to achieve a better valuation in its IPO
Reddit is reportedly also able to access Google’s Vertex AI service through this collaboration. Previously, Reddit announced plans to monetise its application programming interface (API), sparking strong protests among its users. This collaboration with Google appears to explore the possibility of data licensing fees, which evidently could help Reddit achieve a better valuation in its IPO in the short term.
For Google, the diverse user discussions on Reddit serve as excellent contemporary teaching material, significantly enhancing AI models’ understanding of the human world. Google also stated in a declaration that Reddit forums provide incredible, extensive, and authentic human conversation material, and Google’s aim is to enable people to profit from this valuable information.
