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Reddit weighs ending Google data deal as AI search reduces traffic
The dispute centers on a 2024 data licensing renewal, with Reddit considering cutting Google’s access to its content for AI use.
Reddit is discussing the possibility of walking away from its roughly $60 million-a-year data-licensing arrangement with Google, according to the Wall Street Journal, as AI search answers could keep users from leaving Google to read Reddit content.
The companies are negotiating a renewal of their 2024 agreement, and Reddit has discussed ending Google’s access to its material for AI use. The stakes extend beyond licensing payments, because Google’s search also sends traffic to Reddit that can be monetized through advertising, and AI answers that quote discussions could reduce the value of those referrals.
Reddit’s revenue breakdown highlights the sensitivity of the deal, as the company generated $663 million in revenue in the first quarter, including $625 million from advertising and $39 million from other sources that cover data licensing. Walking away could also mean Google loses a source of rapidly updated, user driven product discussions.
The report also weighed on Reddit shares, with the stock down 8.7% after the July 22 report, its worst session since March, according to Barron’s. Coverage noted that hedge funds had been active in the stock ahead of the dispute, while short interest has been higher than in several other large, tech related names.