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The Reddit logo is displayed on a smartphone with Reddit visible in the background in this photo illustration. Taken in Brussels, Belgium. On March 17, 2024.
The social media website Reddit is set to go public on March 21 at a valuation of $6.4 billion. But new AI-related troubles are brewing for the company.
The US Federal Trade Commission launched an investigation into Reddit’s practice of licensing its user data to AI companies, according to a regulatory filing by the company. On March 14, Reddit was informed of the FTC probe “focused on our sale, licensing, or sharing of user-generated content with third parties to train AI models.” The company said it’s not surprised by the inquiry due to the “novel nature of these technologies and commercial arrangements.”
Reddit faced uproar and protest from many of its users and volunteer community moderators this past summer over its decision to sell user data to AI firms, particularly after it raised the price of its application programming interface, which allows third-party companies to interface with its platform.Now, it seems, the decision is also raising eyebrows from federal regulators who want to ensure that the sale of such data is above board. The timing is less-than-stellar for Reddit just before its IPO, but the company is still expected to hit its $6.5 billion valuation.